Am I a good candidate for debt settlement?

Can you provide a list of the creditors you owe and the balances ?

Citibank-12000
Target-4000
Chase 4 cards combined total about 50000
Discovercard 8500
Best Buy 3000
Beneficial Finance 10000
And a credit union visa for 12000 but i know i cant settle that one.

It appears you are an excellent candidate for debt settlement.

even though I don't have much left over at the end of the month, the fact that I make a decent income doesnt matter?

Just because you make a lot of money doesn't mean you are not in a hardship. Keep in mind you have a lot of bills. Bottom line is you have a a high DTI and thus you are overextended.

So if you were in my shoes, you would go for settlement?

If you are going through a hardship or can forsee hardship, settlement is a good alternative outside of doing a Bankruptcy to eliminate debt.

When thinking about debt, you should think of debt as being relative. $100,000 to one person can be just as bad as $10,000 to another.

If you are going to do settlement, I would do some research before choosing. I would compare and contrast at least 3 companies before making any concrete decisions. You need to know what is acceptable to you and what is not. Set goals for yourself to get out of this debt and let the company what your goals are and not the other way around.

Companies I have looked into are Superior and Ram Financial Services. They had friendly people and a good rating with the BBB. I know with Ram they had free e-books that they give to anyone upon request at calltheram The eboos were very helpful and explained Bankruptcy, Debt Settlement, Credit Counseling and Consolidation in great detail. All programs have pros and cons settlement is not an exception.

Settlement is probably going to be the program that you have the lowest payment.

I think if I do settlement I will try it on my own with the help of this site...what do you think?

Settling own your own is a great option as well. It just depends on if you want do all the work yourself or pay a company to do the dirty work for you.

Hello,

I will respectfully disagree on this one.

You put down a total of approximately $87,500 of debt. For a settlement ratio of 50%, you would need to come up with around $43,750 total to pay them off. That's quite a chunk of change...

And that's just how it stands right now. If/when you stop paying on them (Settlement requires you to be 90 to 120 days late), their interest rates will go up, late fees will be assessed, etc., and you could be looking at nearly double the debt amount in a frighteningly short time. Not to mention, the remainder of the debt that is written off in Settlement (for amounts over $600), is reported to the IRS and you will get a 1099C (it is reported as income) which may increase your tax burden, unless you can prove insolvency to the satisfaction of the IRS.

HOWEVER, you also have assets and a good income. I can almost promise you that you will be sued (and more than once) should you attempt to settle. Debt collectors will see that on your credit report and salivate.

I don't mean to scare you or anything, but I have seen this all too often. I think that you should understand the risks involved before you take such measures.

If you decide to go the Debt Settlement route, keep in mind that a company will charge around 15% of your debt, adding much to the needed funds to settle. You can click on "Do It Yourself" above. Debt Settlement works best for low to moderate debt, especially when the candidate has little or no discernible (form a credit report perusal) assets - so I cannot suggest that route.

HOWEVER, there is another thing called Debt Management (or Debt Negotiation) which I would highly recommend first. Credit card companies have something called a Hardship Program. They will lower the interest to around 9% so more of your payments can be applied to the principal so you can pay it off faster. In Negotiation you will have to pay the entire amount, and you cannot miss a payment by even a day (it's best to pay a week early just in case of delays at the Post office).

You can also tightly budget and squeeze out every available dollar to pay off credit cards completely (either the smallest balance or the highest interest first) by applying the extra funds to the principal. As you get each card paid off and closed, you will have that much more to apply to the next card; and the next. Lather, rinse, repeat.

There is also Chapter 13. But I think that a DM program is best for you (and best for your credit!) at this time so that is my recommendation.

What you also want to take into consideration is how your credit report will look *after* whatever you decide is completed.

Debt Management: Cards paid at payment larger than minimum and before the due date, and voluntarily closed by you. Everything paid in full. GREAT! AWESOME!! :D

Bankruptcy Ch 13: Debts were paid in monthly installments to a Trustee for 5 years, after which the rest of it is Discharged (i.e. Zero balance). Not so good, but easily recoverable if you take proactive steps within the first 6 months after discharge you will likely have your score up close to 700 within 2 years. :|

Debt Settlement: 30 Day lates, 60 day lates, 90 day lates, Charge-offs, "Paid for Less than Full Amount"s, and not to mention Judgments. VERY BAD. :( Possible to recover from, but takes more time.

Please weigh your choices wisely and I trust that you will make the best decision for you and your family, and your future.

ChrysHenderson,

Where do you see assets? I sure would like to find them?

Hi, after reading this I'd like to say that I agree with ChrysHenderson: if your debts are not in collections or past due, you're not a good candidate for debt negotiation. It's likely that your credit is in good shape right now, so you don't really have that much leverage.

I'd highly, highly recommend against letting your debts lapse into collections or make late payments. That can potentially ruin your credit if your creditors are unwilling to negotiate later on.

If you find yourself in collections or are making late payments, though, try to find a company that doesn't charge a percentage of your debt.

Disclosure: My wife and I own a company that doesn't charge a percentage of the debt (Allied Negotiation).

Unfortunately, based on your description, you're not a good candidate for our service. Try to negotiate with your credit card companies for lower interest rates. If you've been making payments regularly, sometimes they'll lower your rate which can lower your monthly payments.

Well I cant keep up with the current payments...That is my problem, I am not yet in default, but I will be after some time. Does that not qualify me as a candidate for settlement?

Chrys, I agree with looking into a debt management plan first but a DMP will not help you if you are overextended. Also most people who are candidates for debt settlement will not have to pay the taxes on the forgiven debt because they are considered insolvent. Basically, "insolvent" means that you have a negative net worth -- that is, you "owe" more than you "own." It is described in IRS Publication 908. This person doesn't have a positive net worth. They owe on their home and cars, they don't own them out right. I very much doubt that a person with a second mortgage on their home has a lot if any equity , especially with the housing market being in the dumps right now.

I have no equity in my house, I stated that in my first post. I actually owe 285,000 and it is worth around 245,00. That is why I don't see where he thinks I have any assets at all.

As Mobile mentioned, if you forsee not being able to pay debt back the same amount settlement is probably going to be your last resort. Does settlement trash your credit? Yes it does. Credit is repairable and shetler, food and transportation should be your main priority. The form Mobile is refering to is a 982. If you are insolvent, you shouldn't have to pay taxes on the forgiven amount in a settlement program.

If you do settlement on your own, it is a great thing because you don't have to pay any fees. Just like if you can fix your own car problems please do so. If you are going to do settlement on your own, you will need tuff hide, patience and time.

I wish you the best in finding a solution that works for you!

Please do not compare a technically advanced task such as mechanics with writing a few letters and talking on the phone. They are *hardly* comparable on any level.

Anyway, all we can do here is give opinions. I gave mine, others gave theirs. It is now your task to make a decision and see it to its conclusion.