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Questions before I get started...doing this on our own

Date: Thu, 01/21/2010 - 22:10

Submitted by luckin10
on Thu, 01/21/2010 - 22:10

Posts: 181 Credits: [Donate]

Total Replies: 6


We are going to attempt to settle our debts with these credit card companies. We have personal and business with Chase, FIA, B of A, Cap. One, and Amex, State Farm Bank and Advanta. Advanta is in Chapt. 11. We do have a high debt to ratio however our current credit rating is 726. I realize that is going to change. As of this moment, never been late on a payment, never missed payment, never gone over limit. What we are battling is them just raising interest rates at their free will and now doubling our min. payments which we will not be able to afford. I have contacted one firm(debt settlement) that is out of our state and he was really great but basically told me hey you can do this on your own and I don't need to take your money OR contact someone in your state and look at bankruptcy. I do not want to do bankrupcy b/c it will hurt my husband's business reputation and his business is doing ok. However, due to past circumstances we are not going to be able to ever get out of this combined debt load of just over 100 K. Three questions for now...

1. How do you know which cards to do first..highest interest or highest amounts? Should you only do one at a time or just quit paying on all of them?

2. We are in the final stages of our home loan being modified. This was started by our home loan company b/c they told us it qualified under the Obama Act thing. We were not late or behind on payments. However, we are on an interest only and a 5 yr ARM and value has depreciated and we would not have been able to refinance when the 5 yrs was up. So should we wait until this is final (all indications show it will go through) but you never know until you see it in writing, before we move fw with the credit card stuff?

3. My husband's business cards are our most high debt. Six months ago he has Incorporated the business and those cards have not been transferred over to the corp. They are technically under his sole proprietorship. I am scared to death that any of this is going to affect his business by him being sued or wages garnished etc. Should we move them over or just leave it and quit paying? He is in the insurance business.

Sorry for the long post, but I feel so lost and really need some good advice. I am trying to do so much research and this sight has really helped. I want to do this by avoiding Bankruptcy and I am trying to have hope that we can. Finding legal advice I can trust has been difficult. It seems everyone wants your money these days.

Thanks.


Sounds very similar to my story. I am trying to settle a large amount on my own, doing the settlement part is easy, coming up with the money has been difficult for me. I would stop paying all your cards at once, you might want to keep 1 or 2 if you can do it. They will start calling right away, turn the ringer on your phone off and let the answering machine pick it up. Do not talk to them more than once a month and when you do repeat the same story over and over, do not say settlement in the first 90 days. I'm pretty sure they will go after you personally for the business cards, they are with me. Some might start offering to settle, some might be quick to sue, you never know. I received a summons from Chase after 170 days, but even if you do you can still settle. The main thing is to stick with your story and handle the phone calls. Lots of people on this site to help along the way. If you can start saving some money right away, you can do this pretty easy. The best time to settle is between 4-6 months and toward the end of the month. Good luck.


lrhall41

Submitted by on Fri, 01/22/2010 - 01:49

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Luckin10,

Hi and welcome to the forum. We have just started this journey too as we find ourselves in a similar situation as you, just not quite as much debt, and are about 60 to 90 days ahead of you. You can see our progress on a thread I update on our journey through the settlement process.

Similar advice as above, with the noted exception that should you decide to go the do it yourself settlement route (as we are) and you think you might have trouble coming up with the roughly $35k to $50k in settlement money all at once, you may want to stagger the last payments with each CC a bit. If you stop them all at the same time, you may have to come up with a chunk of change.

As you contact these companies, be careful about the information, particularly your income and business information you give them. They keep careful documentation and it may impact your potential ability to achieve a good settlement down the road. Have your hardship 'story' and stick to it every time you contact them.

I really can't comment on the business situation, as I have no direct experience with that, however, I would be careful about moving them over to the corporation if you are going to attempt to settle those CCs. Having just set up a corporation may actually be a good thing for you, as it gives you a new entity to begin to establish credit through, and transferring a card you are going to default on my not be wise. On the other hand, transferring a card you intend to keep may be a wise move. Once you start defaulting on payments, CCs will jack up the rates (even more) and they start doing credit report inquiries and can decide to cancel lines of credit if they see you having trouble paying your other creditors. If one of your CCs will allow you to transfer it to the corporation, that may be something to consider. Perhaps the attorney that helped you incorporate may have some advice on this matter.

One thought on your husbands business. Not sure if he is in the property casualty or health/life end of the business, but some insurance companies do credit checks during the appointment process to write business with them. Once contracted though, I am not sure if they check credit or at time of contract renewal if they check credit, but it may be a good idea to make sure all contracts are updated. I would also think that your husband may know other agents that have been through a similar hardship, and would recommend that he have a candid conversation with them to see if they can offer any insight into potential issues.

I would also recommend that you read through ALL the treads under this section of the forum and keep coming back to read updates. There is a TON of information from others who have been through what you are contemplating. And don't be shy about posting questions to those threads either. Most will respond with helpful information.

Hope some of this helps and best of luck,

Don


lrhall41

Submitted by TOCOF on Fri, 01/22/2010 - 05:44

( Posts: 16 | Credits: )


Thanks for all your support and advice. I am still just gathering information and still just scared to death! I am also looking into zipdebt.com...I just feel like b/c of the business we have to have really really good support through all of this and I am not sure I can do this all on my own. We have a small savings and if I could quit paying on the cards we could have mabye (barring no set backs) 12K in the next 6 months but that is nothing compared to our debt I realize. And that is if we quit paying on all of them now. So I just don't know what is best to do. And knowing they could sue us..how does that affect my husbands business? His contract w/insurance is solid. But I think if he had a bankruptcy on his file it would hurt all his security licensing in the future. He does p&c, life, health and all financial lines. He has been doing it for a few years.

Any more thoughts and any advice on waiting for the home loan modification to go through?

Thanks.


lrhall41

Submitted by luckin10 on Fri, 01/22/2010 - 09:26

( Posts: 181 | Credits: )


Luckin10,

I have no idea how idea how activity on your CC's would affect your modification. If there is NO underwriting involved in you modification (the qualification process involving either financial info verification and credit checks), then at a total guess on my part, there would be no affect on the modification process if you are behind on your credit cards...but that is a guess on my part.

If your husband has a securities license, then yes, by all means, avoid BK because that does have to be disclosed. I don't think defaulting on credit cards and settling them needs to be disclosed to the regularity authorities.

From what you have shared here, it seems that you may be a candidate to pursue a settlement solution to your debt situation. It is scary, but as you get into it, and read about it, it becomes less scary. And as you begin to deal with the CC's, you begin to realize that there is a certain aspect to this process that becomes a 'game'. Not that its not serious business, but when you begin speaking with the CSR's, you realize that its a 'game of numbers' with the CCs and your/our job becomes sorting out the strategy to get your desired results.

No idea about zipdebt.com, but I can tell you that I have found that there is an adequate amount of support and information here, that I have become comfortable embarking on the DIY settlement process without using a company or service. There are enough folks here that are going through the process as well as those that have emerged from not just the settlement process, but other debt management solutions, that I didn't think it necessary to pay a company 15%, or the fees of other companies, in order to get out of debt.

Don


lrhall41

Submitted by TOCOF on Fri, 01/22/2010 - 09:45

( Posts: 16 | Credits: )


It amazes me how we have to learn about money! Let me start by saying that I know nothing of your particular situation. I DO know about debt consolodation and keeping hearth and home safe and warm while you do battle. Do your home first - just an oldie doing what comes natural. I am with the person who said that if you can transfer one card, keep it clean, do it.

I prefer debt consolodation, particularly if over the months of working through this, you can see yourself breaking by virtue of the phone. I STILL do not answer 800, 866, or anything else starting with an "8". You will not be dealing with the credit card companies because they don't want to deal with collection. They sell your paper to the slime dogs - collection agencies, who have NO scruples of any kind. Their entire mission in life is to weedle information out of you so that they can screw you. You have months of this ahead of you; it will wear on your nerves, your marriage, and everything else in your life you hold dear. You need to know the laws because collection agencies behave as if they never heard the word "law" - they break it every chance they get.

I know nothing of zipdebt - debt consolodation? I went with DTS who is now New Era. I love them. Two more months and I'm out - I was $42,000 when I started; they saved me $15,000 - including all the fees.

ANOTHER THING - when you make a deal with someone, get a settlement agreement. Without it in writing, you have no proof that you ever paid those debts off and they can come back for them again.

And another thing - the FEDS have this relatively new law. (I swear they hatch people to think of squirrely ways to come up with money) When a credit card company writes off a debt, the FEDS look at it as "hmmm. Citibank didn't get it, who did?" Guess who? if you have a $35,000 debt with someone; you make a deal at $20,000, that company is now OBLIGATED BY LAW to file a 1099-C in your name for the $15,000 they did not get. The FEDS see that as cash in your pocket. And in true FED fashion, they may not get around to nailing you for a couple years if you do not file a 1099-C. If Citibank does not have a correct address or it doesn't get delivered for whatever reason, the FEDS will find you eventually. That is my one argument with debt consolodation - they say, not everyone files a 1099-C. Bullshit! They have to. It is the law. And these days, the FEDS are right on top of it!


lrhall41

Submitted by on Fri, 01/22/2010 - 20:27

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