100k debt, need advice!

I posted this in another thread, i will copy it here as well. It's just my story so far. I never once thought about hiring a company to handle this. I do not believe that they can get better settlement amounts than you can...so why pay them. For the amount of work required, you would be paying them hundreds if not thousand of dollars per hour to do something that you can do. It's like paying a "professional" landscaper $800 per hour to mow your grass...did not make sense to me. Not to mention the fact that it will take longer and raises the possibility of being sued. All negatives to me...so in the end I saw not 1 reason to hire anyone else, besides your best advocate...is you!

Here is the post, hopefully it helps a little.


"Before today i was 45K in debt. 1 BoA, 1 Chase, 1 Discover, 1 bank visa. Settled the Chase for 32% and the BoA for 33%. From reading here I could have probably waited another month and gotten 25% from BoA, but they gave me 3 pmts and didn't want to settle the discover at the same time as another BIG one. I expect discover to be the toughest one and the most expensive one...we'll see.

The key to this is to keep your emotions out of it as much as possible. It's just business...I know, sounds cliche, but it's true. To the CC, it's just business...it's an attitude. For the 1st 90 days, not much will happen. They won't settle in this time anyway, so don't bother...just save every nickel you can. During this time, call each creditor every couple weeks, say the same sad story each time and tell them that you just want to keep them in the loop on your situation. DO NOT MAKE ANY PAYMENTS...EVER!!! If you are going to settle, you need to stop paying all! After 90 days, you may get an offer from someone, if you can swing it, do it. Many will say to wait for the 150 or 180 day mark to get the best deal, but if you have all your settlements at the same time it becomes financially tough to pull it off. Research your creditors, know which ones are hard and which ones settle easier or quicker. In my case, Discover does not like it when you offer a settlement, if you do, they may sue or send you to a CA right away. After the 120 day mark, call each creditor and talk settlement, use round #'s not %'s. Have a goal in mind and try to get it...be nice and call every day. If you get some chowder on the other end, kindly end the call and call back to get someone else. When they say that X amount is the lowest they can go, ask if someone else can approve your amount...if not try in a day or two. They will come around, spend 5 minutes or so on the call. Save your money and be proactive and you will succeed.

In the event of a lawsuit, which is rare, ANSWER THE LAWSUIT!!! Do not allow a summary judgment to be entered against you unanswered. Answer the suit and DENY everything!!! DENY everything! Make them prove everything in court, that is your right. Even if a judgment is entered, you can still settle it. Even if you had to pay the full amount and reached settlement of 25-40% on the other 3, it would be worth it. Do not fear any of this.

Debt is a tool of the banker to keep you poor and in bondage, you are a slave to the lender. Once you get out of CC debt, pay off your mortgage asap and never borrow another dime, at least that is my plan! "

Sounds like some good advice mn, I will let you know how it turns out.

Thanks for the advice MN! You are absolutely correct and I'm glad for the information. I will wait it out and definitley not let my emotions get in the way!

Can't agree with mm more. We had 65K in debt and we weregonig to hire settle company ( curadebt ) but next day I found this forum. That was 5 months ago. We settled Chase 31K at 30%, BoA, 19K at 30% 2 HSBC at 50% adn 40%
and citi at 40%

Chase and BoA were the easiest to work with.
Citit was the hardest. But they settled.
We did almost exact as the mm post said.
You can really do it yourself and save a lot of $.
Thanks to this forums advice we are out of debt and this feels really great!

Don't hire anyone!

Good luck!

I'll be cheering for you guys when you post here about your first settlements and encouraging others to be bold too!

I hope people read these stories and feel like i did when i read similar stories months ago, it"s encouraging to know that many many people are making it work. Knowledge and information are power in this world...I am only partway through the storm but can see the light at the end of the tunnel...it's not a train, it's a debt free life on the other end. I am determined to get there and you can too. I so appreciate the people who posted their stories for me to read...it made all the difference in the world!

Your credit is trashed no matter what route you go since you have to be late to get the best settlement if not already in collections. You won't be able to use your credit what ever way you go

I have 13 CC and already settled by myself for 11 of them after 4 months late. So just let you know that self settlement is doable. All the matter is to make right offer at right time. To me, after 120-150 days is the best time to offer. Do not affraid of the creditor. As long as you have nothing to loose, they will bend to get whatever availabe and run.

currently going through sep/divorce. just let the CCs go late in June, it was really hard. about 50K in debt, scared and stressed out. Now they call all the time, what is best, should I talk to them or just ignore the messages? I am sick over this and don't know what to do. Thanks.

To this last person, take a deep breath. When we went late two years ago this past March, it was a unique experience. We hired TDS to handle the debt negotiations. Whether you hire someone, or go at it yourself, learn all you can about the process. Our original CC debts, with two exceptions, got sold and resold to 3rd parties. Either the third party is a debt collector, or they are a law firm acting as a DC. From our experience, the law firm, depending on who they are, may initiate a civil suit (we've had one from a sold-off account), from which they will most likely get a judgement. Judgements are by law the method in which they have to collect a debt. Enforcement of a judgement is going to depend on your state's laws, which should be easy enough to look up if you get to that point. We are now embarking on this judgement, two years after first going late. In that time we have settled 40% of our debt (which started near 100K total). And I have been unemployed for the last year. The whole process is scary at first, but if you can't pay your debts, negotiating settlements is the way to go. Hold off even looking at bankruptcy until it is absolutely necessary. They can't touch your house, your car or your first-born if it's just CC debt. When we embarked on this in March of 2007, I had only just heard of debt negotiation. Now it is all over the place, on TV, radio and print. If you hire someone, be sure they are legit. Ask questions about them here, see if they are a member of NASC.

The timeline at first for us went like this: We could no longer make payments starting March 2007, and that is when we went late on all of our cards. We had our first settlement in June 2007 from WAMU (previously Providian) for a 40% settlement. Our settlement percentages have ranged from 20% to 45%.

The key to all of this is saving as much as possible so that you can do a settlement if a good one is offered.

As far as answering the calls or ignoring them depends on whether you have the wherewithal to talk to the collectors. Many times we answered the call and they simply hung up. In our case we would simply give them the contact info for TDS, the company we hired. It really hasn't been so bad.

Make no mistake though, your credit rating we tank. But I have long believed the FICO score is a method of bandage for the masses. It didn't take long and we started getting CC offers in the mail, even from the places we recently settled with. Of course we're done with that, but it signals to me that this is all a business game. Keep this in mind: The CC company will sell off a debt, write it off as bad debt on their books, and the resulting purchaser of that debt stands to make $$$ from any money they collect because they likely bought it for pennies on the dollar!!

Good Luck and stay sane.

I answer the phone about once every 3-4 weeks and tell them my story. I can't pay anything at this time, I am trying to work things out. They will try to get you to pay something or get on some hardship program, do not pay anything. Save your money and try and settle between 150-180 days. I am in the process and this is my plan, I don't claim to be an expert. This seems to be the strategy from most people.

Thank you ... thank you very much ... as said "the light at the end of the tunnel".

How about tax with IRS ... will they tax as income? Please let me know for my arrangement.

KJ

If you are solvent then yes, if you are not , then no.

P2 is correct. People should be factoring the tax issue BEFORE starting a debt settlement plan, so you are not hit with anything unexpected.

Hi,

A little confusion on the term solvent ... can you give an example?

Thanks a lot

A little confusion about the term "solvent" ... can anyone give an example?

Thanks a lot.
KJ

I found this information but still confused a little ... anyone has experience about this?

When your debt is settled, the IRS considers the amount forgiven as taxable income. For example, if your forgiven debt is $4500 and you're in the 15% tax bracket, then you'll have to pay $675 as income tax. However, you will not be liable for such taxes if the creditor settles your debt because you protest an owed amount.

If you combine your assest and your debt just prior to the settlement and it turns out that you own more then you are worth, then you will not pay any taxes.

For example you have a house worth $200000, but you have house loan of 195000, so you have $5000 equity, plus you have 62" plasma tv and old car that is paid off, some cloths, dog , etc. all worth $22000

But you have $68K in credit card debt.

$68K-$22K= $46K in red = you are insolvent

Now, if you settle with bank to pay only $30K , your canceled debt is : $68K-$30K = $38K

Since the $46K exceeds $38K you can exclude the entire $38000 from income, and you pay no taxes.

stupid IRS

I see ... people whoever needs debt settlement mostly are qualified for paying no taxes ... :-) ...

But ... it might be a stupid question ... how can IRS know, I must report on the tax return? Or creditors will issue a sellement stated that I am insolvent?

Thanks a latte

The creditor will issue you a 1099.

And then you make the calculation. ~you could lower the values of your items to get insolvency = if you spent $2000 on new computer , after 10 moths this thing is worth half that or even less same with your tv and furnitures. the only thing that keeps value this days is jewelry.

There is really no way irs could check that how mych you are worth.

and yes 1099 is sent to you and irs by the bank so the irs knows how much you were forgiven.

Solvent is basically net worth. If you add up your liabilities and then you assets are you positive or negative. So most people that are seeking debt relief are "insolvent", (negative net worth).

Basically the IRS allows a pass on claiming the forgiven debt as income if you have more liabilities than assets at the time the debt was forgiven. If you do get a 1099 from a creditor, then you can fill out form 982 from the IRS which essentially is asking for a waiver due to the fact that you weren't solvent at the time of debt forgiveness.

Whoever does your taxes can do this for you, it is a simple form. The key is to take a financial snapshot in time when you settle the debt. If you track everything in a program like quicken, all you have to do is print the report.