Do it Yourself Settlement 1st step Question...

I'm not sure I would stop paying completely, I would send them a letter, along with the payment you are requesting to pay. Someone else can give you more information, I'm just going on what I've heard. :)

If i resume payments, won't they just see that I can make those payments then?

If you send a smaller payment with a proposal it will be more like consolidation rather than settlement--Consolidation will pay your debt in full, and will be reported favorably in your credit report. Settlement can be seen as a negative as you're paying back less than what you owe.

Also, from what I hear, the creditors can file with the IRS for the amount they're writing off and you have to pay taxes on that.

...Welcome to the forum! I'm like Jesi,I don't think you should stop paying the yet. What I would do is,call each one and explain your situation,ask them if they will lower or stop interest so you can pay them. Years ago I talked to a gut who was from Vis and explained my situation and he totally stopped the interest if I woul pay every month what we settled on as a payment,and it helped get it payed off sooner.Explain to them that you want to get these paid off but you are having problems doing it . Sometimes they will work with you if they think you are wanting to pay instead of trying to not pay. I will warn you there are some creditors and CA that are nasty and will refuse to work with you too,hope you don't get these! Best of luck-keep us posted. Also read some other posts on your subjects,you may find your answers too :D ...Karen

Hi drewdear22

Have a look at Do It Yourself section in this website. This page will guide you to make the best deal with your creditors. Like everyone said, you should talk with your lenders and explain your financial situation. They will be willing to work out payment arrangements with you. Some of your financial charges and late fees can also be waived off. You will get the benefits of a consolidation program if you are able to fix up your payments with the lenders.

In case, you are expecting to default in your payments in the future, debt settlement can be a choice. You will have to negotiate with the lender for a reduced amount. The lenders might offer you a discount of 40% to 60% in this plan.

Consider your financial position at present and offer realistic plan to your lenders. Do some budgeting and you will come out being debt free.

Now, ask yourself this: If you are sending them some sort of payment verses no payment--why do you think the cc company would want to settle anything as they are receiving payment from you.

I joined a debt settlement program and stopped payments all together and started paying the debt settlement company---it has been 8 months and the cc card companies are wanting nothing but payment in full, it is not something that is negotiated over night or even two months for that matter. From what I understand, it is a fairly lengthly process.

As for the taxes...you don't have to worry about paying the IRS for settled loans if you are insolvent at the time it was settled. Now on the other hand if you own assets then you may have to pay taxes on the amount "forgiven", but most of us would not be in credit card debt if we had assets laying around...huh? 8)

It is upon the consumer if they wish to make the payment through the settlement/consolidation program. The creditor will be most interested to get their portion of money in the first place. You need to explain your creditors that the partial payments won't last for longer period and you will default in the future. So, it is important for the debt to be reduced. If this explains your situation, the company will likely reduce your debt. A consolidation plan might help in this matter.

But if the credit company is not accepting your proposal, debt settlement program is the option. Your negotiation with the company will decide your outcome of the account.

Personally, I would go thru a debt consolidation plan. I had one credit card that negotiated w/ me a pymt I could afford. They charged no interest & no fees, however it was for only 1 yr. I did not know that. They then wanted me to pay a large amt upfront to get a lower interest rate which I could not do at the time...so the interest rate went right back up & so did the fees....basically putting me back to where I was after I had paid on it for 1 year. By that time I was then enrolled w/ a credit counseling agcy...they then lowered the rate & will charge no fees until the end of the program. Which will be longer than 1 year. If I would have added them at the time I went credit counseling those fees would have not been added. Of course I didn't add them at time I enrolled because I already had something worked out w/ them. That REALLY made me mad. Just wanted to share my experience.

Hello Drewdear22!!

Welcome to the forum! It will be nice to hear more of your story as time goes on!

My personal recommendation would be consolidation, but I have never been in your situation, as you know that you might default and you have a chance to handle it before it gets out of control! I just ignored my problems like a doof and I regret that. As long as you are proactive, it will work out in your favor.

~Mary