Some questions from a NOOB!!!!

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How to contact creditors

In addition, I want to tell you that if you find any trouble in handling your debt by yourself then you may go for debt management program. It will assess your debt through credit counseling and make a budget for you. It will also help you to consolidate debt and decrease interest rate/eliminate late fees on your debt.

You can also get Free Counseling from one of the financial coaches of our community on your debt.

$400 to split between the 6 won't get you anywhere because your monthly payments are probably between 600-750/month. On top of that you're having to pay catchup w/ regards to interest and fees. Settle your accounts. If your budget is $400 you'll be able to either do it yourself or qualify for a settlement program easy.

Solicitation is a violation of the TOS - ND

Well right now I can afford to settle one account. I got offered a settlement from HSBC for 30% off, but it is almost $400 a month for 6 months. If I took that, I couldn't pay anything else. That makes 4 of the 6 that have already said they would work with me, but I just don't have the money to do it.

That's why the process can take a length of time - you build up your funds, then settle. Then build and settle again and so on until all your cards are settled. During the process, keep your creditors in the loop or "at bay" so to speak because you will get harassed and there is a possibility you could get sued or garnished.

I don???t think I would take the offer from HSBC. They offered you a 30% discount at $400/month for 6 months or $2400. This means the latest balance is approximately $3500. Probably $300-$500 of that is penalties and interest. Save your $400/month for 4 months and try to settle it for $1500 which is 50% of the original balance of $3500-$500 = $3000. If you original balance is lower than $3000 then offer them 50% of the lower number.

As a side note their current offer is all smoke and mirrors. They make it look like they are offering you a break by telling you they are cutting 30% off the top but really they are at worst breaking even after you take in to account the inflated price from penalties and interest and the tax break they get on the reported loss.

Thank you DOLLARS for the advice. Not sure what else to do...for one it's my responsibility to pay the contract I signed up for and two, I really don't wanna get sued. If I keep not paying all 6 to try to get a settlement, then won't I most likely get sued?

Well, I am starting my calls tomorrow morning. I will let you know how everything is going. Thanks for the advice.

Never accept the first offer. If they come in at 30%, counter at 80%. Haggle with them, it's a game and may take 3-4 counter offers before you get a reasonable offer. Yes it is your responsibility to pay the "contract", but if your interest rates are 15-30%, that isn't fair is it? It's legal loan-sharking - you owe them money not your life!

If you owe 20,000 to 6 cards then on average you owe $3,333 to each. In my opinion it is possible to be sued but chances are pretty low of ever being sued for under $5,000. I think it is very rare that a company would sue in the first 6 months especially on low amounts. Usually they charge it off and let a collector deal with it. I would guess 5 of the 6 will either never sue or put it off for a couple years. Also, you can always settle for payments when they are on the verge of filing. It really is no different then settling for payments now. Basically you can always negotiate for any terms that are acceptable to both parties.

Really the only negative effect you will experience is collection calls and the negative impact on your credit score. You can deal with collection calls by simply not taking them when you have no cash saved to settle with. I would recommend never talking to a collector unprepared. At a minimum you need to know the amount you want to settle at and not budge from that figure before you talk to them. I would never spend more than 5-10 minutes per week on the phone with them. Time is on your side not their side. They will try to convince you that it is urgent that you pay today but in reality you could pay them months from today for the same price and many times a lot less.

Your credit score would be much better if you did not let the accounts go delinquent. If you let them lapse and then charge off your credit score will be wrecked so keep that in mind. It will make it difficult to borrow money at a decent rate until you settle the delinquent accounts and then wait some time for them to age or be removed from your report. I would suggest pulling a current copy of your report so you have proof of the reported balances as of today. You might need that in a couple years if you have not settled all of these by then.

The only alternative to keep your credit score from being wrecked is to pay your minimums on time and pay extra until you have eliminated the debt. Most people that don???t do this just simply get in over their head in debt and get to the point where they can not pay to meet the minimums anymore. In your mind you think you are the only one responsible for that debt since you did sign a contract but I would suggest that the credit card companies and banks are at a minimum equally responsible if not more responsible. They take the risk when they loan the money to people that are already over extended. Take a look at the subprime mortgage sector for example. I think if you have the money it is in your best interest to pay the accounts but given the circumstances many people are left with no alternative but default.

Thank you very much for your advice. My head is just spinning from all of the thoughts going on in there. I'm just a big worry wort and I always think the worst is going to happen. Do you think I should call the creditor that is making a settlement? If so, since you are suggesting I don't take their 30% offer, what should I say to them? Sorry if I seem so confused about all of this, but I am....lol. I really appreciate all your advice and patience.

I think the first thing you should consider is making a written budget and sticking to it. List out all of your monthly expenses on paper and organize them in the order that they should be paid. You should always pay necessities first. In my opinion you should always pay your bills in the approximate following order:

1. Mortgage/Rent and insurance
2. Transportation Costs including fuel/tax/insurance (If you owe a large amount on a car then sell the car and move down in vehicle value)
3. Necessary Utilities (Gas/Electric/Water/Trash/Sewer)
4. Minimum Groceries
5. Any other secured debt
6. Childcare
7. Frivolous Utilities ( Cable/Satellite/Internet/Phone) disconnect them if money is tight
8. Savings Account until you have 3-6 months expenses saved
9. Necessary Clothing
10. Any miscellaneous expense
11. credit card debt

Once you have your budget you can use it to determine how much extra cash you have per month to devote to eliminating debt and you can use that to determine what kind of settlement you can agree to. In your case it sounds like you can save about $400/month. Never agree to payments that you can not afford or that will pull money from more important bills further up the list. You certainly do not want to pay a credit card and put your home or rent at risk.

I prefer lump sum settlements over monthly payment settlements. I would suggest saving up $1000 and then call each of your six creditors with an offer of $1000 as settled in full assuming that all of your balances are at least $2000 each. If they are less than $2000 then offer 50% of the balance. Start with your smallest balance and move up. If one does not accept then move to the next until either one accepts or none accept. If none accept then save another $400 or so and make your offers again the next month. As time goes by they will settle. I think 50% is fairly easy to get and is usually about where I settle. Others on this board have had better success than I have in getting down in the 20%-30% range. Just make sure you have the cash saved so you can instantly settle when they accept. Make sure to get it in writing first as an signed agreement. Do not give them electronic access to your bank account either.

Well, I didn't accept the offer from HSBC, for one, I am sick of trying to talk to these people that I cannot understand. How am I supposed to work out anything if they can't speak english? I ended up calling and negotiating with WaMu for 45%. I was able to save $1800. I'm just waiting till the morning when I can get the paperwork faxed to me.