WWYD? Worth it to default to get a settlement?
Date: Thu, 09/08/2011 - 10:26
USBank 5,200 10%
Chase 1,500 5%
Chase 2,000 2%
CapitalOne 800 18%
Capital One 750 19%
Total= 10,250
Department store card balances all with World Financial National Network Bank at roughly 24.9% or so:
850
600
525
450
Total= 2,425
All cards combined: 12,675
My total minimum monthly payments are somewhere around $450
It's the total minimum payments that are killing me. I live paycheck to paycheck, just barely. In fact I'm not so sure I could even say p2p quite cuts it, because everytime I refigure my budget I'm always a little short... so that must mean by chance every month that I'm spending a little less in one category and it ends up working out.
Anywho, about a year ago I had contacted a company about a DMP and even best case scenario they JUST barely would've lowered my minimum monthly payments, and I still would've been paying for the next 5 years. The low interest rates with USB & Chase are ones that I negotiated myself.
My credit is already shot, and has been. I can't get approved for anything of substantial value. The only time I've seen the word "approved" anytime in the last year was with BillMeLater for some household items I needed earlier this year when I moved. Oh, and about 2 months ago Macy's approved me for a store department card which I only used to make a $75 purchase and it was paid off within 2 months. Other than that, I have a car which will be paid off worst case scenario in August 2012 (that's the end of the loan). Thankfully I have had 0% interest on that since it first started. I live in an apartment that I really like, and don't see myself moving anytime soon in the next 2-3 years.
The questions that remain are:
-Do I have anything to worry about with my car? I am co-signer on the loan, with my Grandma being primary (this was because at the time of purchase I was 19 and there's no way in hell they would've given me a 20k loan with 0%) I have never been late on it, and never will be. My car payment comes before any of my CC's do. I would never even chance the idea of them taking away my 0% on it. But if I decide to let my CC's fall behind, do I have anything to worry about with this car? It's "my" car, I drive it & make the payments. The car is currently registered in my Grandma's name, which she hopes to transfer to my name when it is paid off next year, but if it has to stay in her name she'd be okay with it.
-After doing a settlement, on average roughly how long would it take until my credit would be okay enough to buy a house? While I'm very happy with where I'm at right now, I'd like to think that within 5 years max that I'd be able to get a house. I'm not talking about a "perfect credit loan", but even any of these places that work with people with crappy credit to get them a loan. I completely understand that I'll probably end up paying a bit more than others in interest, but hey, that's nobody's fault but my own.
Now before someone jumps on me about how your CC's have to be behind to settle... trust me, I know. About a year & a half ago I worked for a collection agency and we collected on Target Visa accounts. I handed out settlements all day long like candy. We dealt with accounts between 3-6 months behind. We had a matrix breakdown of "X amount of months late can settle for X%" and that was it. Very rarely was there ever any additional negotiations. The only time we'd contact Target to possibly bend the numbers was on a large account.
Is Target the only one that is this easy? Unfortunately I don't have a card with them lol ;-) I wish I did, because all agencies that they used had the same matrix to follow, and I'd be able to say "just wait X amount of months to get X%"
My fear is waiting out the accounts for a good enough settlement (and not getting one), to the point that it gets charged off. I'd like to think a CO is worse than settling.
Technically I probably could continue to just make my minimum monthly payments, but at this rate they aren't going to be paid off for another MINIMUM 5+ years. So that means my credit is going to shot all this time anyways. So I keep thinking to myself if it's going to be shot anyways, why not make it a little less stressful on myself?
I already work minimum 80 hours a week, so adding additional income just isn't possible. And I've been working like this for well over a year now, and it's wearing on me. There's only so much longer that I can work 7 days a week nonstop (literally) before I just break. A year ago I had to start on medication for depression... who knows what is next.
What would you do if you were me?
I'm in Ohio for those of you with SOL info ;-)
Thank you in advance for any opinions or facts that you can share.
Oh and I have a bunch of medical debt too which has just been ignored entirely. That has been going on for about 3+ years or so. Only 2 accounts have charged off and showed up on my credit reports, but then I disputed with the reporting bureaus and was able to get them removed. If I were to put a price tag on my medical debt, I'd estimate somewhere around $8k. This is what happens when single female never has health insurance and goes to the doctor anyways, and just never pays the bill. I'll deal with the medical stuff later, it's really not a concern of mine right now.
Ok...you want to do settlements but where are you going to come
Ok...you want to do settlements but where are you going to come up with the cash to do it? You say you are living paycheck to paycheck working 80 hours and you cannot afford what you are paying now. You won't qualify for an unsecured loan for almost $13k. You appear not to have the discipline to live without credit and it sounds like you have been digging yourself in deeper by applying.
What it comes down to is you did not get into debt overnight and you cannot expect and easy fix. Your first mistake was the car...I am assuming your payment is around $330 per month and with your age at least $75-100 per month for insurance. You didnt "need" a 20k car at age 19....you wanted it. And it sounds like your spending habits have followed those "wants" instead of "needs".
Getting out of debt is not going to be easy and you need to commit to be disciplined. Any DMP is going to take at least 3-5 years. A debt consolidation loan even if you got gramma to sign for it would be the same. To settle on your accounts, you would need to stop paying all your accounts and start saving every month...creditors are going to look at your credit though and see the cosigned car payment being paid on time...that will hurt you. Cap One likes to sue..are you prepared for that?
Well, here's the thing, if I were to stop shelling out ~$450/mo
Well, here's the thing, if I were to stop shelling out ~$450/mo I could easily be in a situation to settle in about 3-4 months. Maybe not my big account, but the others I could (and of course, no, I don't mean every single one of them at that moment, but within a couple months, yes). I didn't have any intention on getting a loan, and I wouldn't be approved for a loan, nor would anyone else co-sign for me for one. When we settled Target accounts you were always able to pay over a 3-4mo time, if need be. So I guess that's also part of what I'm wondering about these other accounts, and if they are just as "friendly" as we were with Target.
I didn't have the discipline when I was 18, obviously. I am now 24, been living by myself for 3 years. I'm also self-employed and am starting a brand new venture. My venture is stemming from my colleagues business. I do some work for him, and now I'm starting a subsection of his business with a specific skill set. Part of my income comes from working with him, and in turn he's sending his clients to me. But, never mind that.
So yes, I completely admit that I used to not have the discipline. But if you look at what I've mentioned has happened in the last year, with me getting that BML account purely for some things that I needed to purchase to move earlier this year, and also getting that Macy's card and only spending $75 and paying it off within 2 months. Compared to how I used to be, that's a huge difference. Back when I was 18 I would've ran up the entire Macy's card, just because I could. But I didn't... and I *still* haven't touched it. I'm pretty confident in saying I know what went wrong, and now I'm paying for it. Half of these cards have been closed anyways, and are unusable. I don't add things onto them, except once in a while if I don't quite have the cash in my bank account to cover groceries or gas. Given how many hours that I work, I don't have free time to go out and go to the movies, or to the bar, or out to eat. I'm quite disciplined nowadays.
My car payment is $250/mo, and my grandparents pay my insurance. They asked me to take over my payments once I turn 25 next year. But even then, my insurance (on the high end paying month to month) is like $60 or so. And yes I did need a car. My old car was having problems and it was going to cost more to fix it than what it was worth. And thank god I've had a new car all this time, because I wouldn't have been able to afford paying for car stuff when stuff goes wrong with it. My tires were replaced 2 Xmas's ago, and that was my present from my grandparents. I was allowed to choose between cash or tires....... so if that's not a step in the direction of being disciplined, then I don't know what is.
Okay, so if C1 is sue happy then I'll catch the account back up before it charges off, if I have to and haven't been able to get a decent settlement from them.
My car will be paid off in just under a year, so maybe I'll just wait until then? Or, whose to say that my car payment is being made by me? I don't believe the creditors would know this... unless illegally accessing my account without my knowledge.
Be committed
I am in agreement with Soaplady in the fact that you if you live pay check to paycheck, you will have to make changes in your spending habits expecially with the clothing stores. You could possibly do some sort of debt management and your payments will be dropped by about $200 with the cards that you have. That would give you some sort of cushion.
But, if you believe that you have enough discipline to save the $450 every month instead of sending payments, you can quite possibly look into settling. There is no doubt that settlement will hurt your credit currently along with consolidation.
If you want to be out of debt sooner, then settlement is probably your best option, but you have to be committed and you will save money in the long run. As for buying a home, there are plenty of people that have purchased homes within the first year of paying off their last account. With what you are doing now, without making a decision to clear up this debt, you won't be on track to get a house in five years.
Just continue to save the same amount of money each month in order to be ready for home ownership. Good luck!
Marie, I am working on debt settlements on my husband's account
Marie,
I am working on debt settlements on my husband's account of about $47K and we have settled them for about $22K. On my credit cards though (I had about $90K between self-employed business cards and personal cards), I am on hardship agreements. I went late on all my cards at the same last year. Pretty much before I even got reported 30 days late I was able to get all of them to agree to 5 year payouts at 0%.
I thought that was fair and have been making my payments. It reduced my monthly payment total significantly and everything goes to principal now. I didn't have any large chunk of money to make settlements so this was perfect for me.
When my husband's job changed and he lost 30% of his income but got a $30K severance check we decided to go late on all of his and try to settle them.
You might try going a few weeks late and work the hardship program approach. Take all your accounts and divide the total by 60 payments and see if you think you can swing the new amounts. Then you will be rebuilding your credit over the next 5 years as well. When the car is paid off you can double pay on some of the accounts and probably finish before 5 years.