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Everything posted by lostindebtinVT

  1. I have a friend who settled their debts in 2007, they received 1099's from all the creditors from the date of settlement. According to the IRS you must do a balance sheet the date of settlement on each settlement and hopefully the creditor will date it correctly, with my friend, they did. I asked each creditor when they would send the 1099c and they said at the end of the year they would be issued.
  2. I would call the creditor; check their records and offer an over the phone payment off my checking account. Get the third party out of the picture and work directly with the creditor for the final settlement and then you will be sure you are not being taken advantage of. Was the second settlement letter from the third party or the original creditor?
  3. Payments made to a law firm are generally not reflected on your credit report because they do not report to the credit bureau until the debt is paid in full. I don't know what your income is but I think I would check with a bankruptcy attorney and consider filing for bankruptcy protection from those lawsuits. If you cannot do this, are you able to settle the debts for less with them?
  4. After 45 days I started talking to them every two weeks; I had a privacy corp answering machine that screened my calls so the phone would not ring when it was a creditor (I had programmed their numbers in). At 45 days I told them I had no income and my intentions were to try and borrow money from family to settle my debt with them. Some would say they did not settle, but I knew they all would in the end. They all have their policies for settlement and I learned as I went along. Your first creditor to settle will be MBNA or BOA - they will settle about 35% at 90 days.
  5. In December of last year I stopped making my credit card payments and I had $133,000 in credit card debt that was growing monthly at 29.99% interest with late fees and overlimit fees. I was more than panicked with many sleepless nights and the phone ringing off the wall. I'm happy to say that with the right planning; I borrowed from my 401k, received money from family, cut back on my expenses and sold personal possessions - I was able to come up with enough money to settle my accounts. I had the following results: BOA - 38% at 90 days delinquent Chase - 45% at 120 days delinquent Citi - 38% at about 100 days delinquent (they called me) Discover - 50% at 170 days delinquent (the hardest one to settle) Sears - 0% financing for 5 years at 120 days delinquent. I now only owe $6,000 in credit card debt with Sears and resolved my credit card situation in about 7 months. I still have some tax implications to deal with, but I'm trying to sell my home so I can take care of that. If I do not sell by filing next April, I will just have to work something out with the IRS. I am insolvent for about $45,000 of the savings so my tax implications should be around $12,000 - I receive a refund generally of $5,000-$6,000 so that means I'll have $6,000-$7,000 left to pay them; the IRS will take a installment plan at 8% interest if you work it out with them and I could do that until I filed a few more years. They can have my refunds, to me it beats paying those credit cards who were at $4,000 a month by the time they were done with me. So with all that said; I'm hoping to have my house sold and the IRS paid in the next year. I have another smaller home I am moving to that is less expensive that has been rented. The tenant is moving on August 31st so I will move to that house before winter in September because I have a wood pellet stove there and it will be much cheaper to heat. If I don't sell this house here, I will rent it for the winter (no one moves in the winter). So I have some breathing room if I can keep the car running (it's 8 years old) and I can get the house rented or sold. Hopefully, the housing market will turn around some more so I can make more money and get back on my feet. I think that is more likely to occur next year so I'm planning on a rough winter. I did my own negotiating with the creditors and found that if you treat them wth respect; most of them treat you with respect. I talked to some very caring people that could relate to my situation. I guess I would say from my experience, to anyone thinking of doing debt settlement, is to sit down and figure out what you owe and figure 50% of that amount is what you will need settle your accounts. I was fortunate because I saw it coming and was able to borrow before it was too late and that is what made my debt settlement successful. If you wait until it is too late and you have no resources to borrow from or family to help you; you will be less successful. I think the biggest mistake people make is waiting and trying to keep paying until they are at the end of their rope. If you know you are in trouble, see it coming and still have some assets available by borrowing from your home or 401k or you still have some savings; don't use up all your resources until you have nothing else to tap into; stop the bleeding before it's too late. www.lostndebt.savingadvice.com
  6. They offered me a 55% settlement or a 0% financing plan for 5 years. I took the financing plan.
  7. Has anyone been able to settle with Sears. Sears was purchasd by Citi - Citi settled with me at 38% but at 120 days late they will only offer me 55% which I do not have, has anyone done better than this?
  8. I had a discover card and I had a very difficult time with them. They always start at 85% - then they go to 60% and the lowest I got them was 50% - when they finally settled with me. I was still with them and was not making payments - about 170 days delinquent they dropped to 50% and they told me that was the lowest they would go. However, I've read about some lower ones but I was almost at chargeoff and didn't want to try to settle after a charge off. I would not be surprised that they would accept less if you waited a bit. If they see they are not scaring you into paying the 85% they will probably drop that in a few months. I would ignore them for a while and then try again. They have their judgement, depending on the state you are in, it may not be worth a garnishment procedure. If you read and look at sample law, you may be able to file your own vacate paperwork - sending a summons to a PO Box is not legal. Best of luck - they were the hardest creditor I had to deal with.
  9. Under the new bankruptcy laws even people who are insolvent may not qualify for Chapter 7 due to their income because they have to meet the median income requirements for their state, they then file for Chapter 13 if there income is over the median income and the judge determines which creditors and how much they will be paid. So people who could file Chapter 13 would also qualify - and willing and I have had this discussion before and I'm afraid people will think just because they can't file Chapter 7 they can't file as insolvent; I guess I don't believe in the analogy and people will be scared into filing bankruptcy versus settling their debts because of tax implications which may not exist. The only sure way to know is to do your research and talk to an accountant or an H&R Block representative.
  10. You are currently only 90-120 days late - BOA offers their best settlement after 120 days late and it is usually 30-40% of the balance.
  11. You cannot negotiate not receiving the 1099C because they are required by the IRS to file it. However, you also do not have to qualify for Chapter 7 bankruptcy to qualify and be insolvent. Read at www.irs.gov about the 982 form and their definition and talk to them about insolvency. I have spent hours researching the subject and if your liabilities exceeds your assets then you can claim insolvency for the amount you are insolvent. Otherwise if your debts are $150,000 and your assets total $120,000 - you are insolvent to the tune of $30,000 and would be exempt by that amount. The problem lies in the definition of assets and liabilities. I printed off all my statement on my debts, assets and etc at point of settlement to show what my position was and to value my vehicles and home I used various services to value the same on line. I put these documents in a file in the event I am audited. You have to prepare a balance sheet and attach it to your 982 form when you file your taxes. I would think that if you included your supporting documentation as well you would help prevent an IRS audit. I intend to use an accountant as well when I file just to help to prevent an audit. Even if I had to pay taxes on all the forgiven debt I'm still ahead because I cleaned up my credit cards, didn't file bankruptcy and I still saved money and stopped the bleeding.
  12. Some creditors will accept payments for up to four installments but what I found was that they will want more money than they would have accepted on a one time lump settlement.
  13. Mortgage Finance is my business and I've been in banking for over 20 years. When we as lenders see a settlement, it is a settled debt, meaning you paid it. Mortgage Lending is much stricter than a consumer loan such as a car and etc. We usually like to see a good 12 month history after a settlement before we are willing to lend on a home. However, if there was a chargeoff several years ago, you have new debt you have been paying as agreed and you just settled that old debt, you are generally eligible for a loan at that time, sometimes a requirement that you settle the debt is part of the loan approval. As a lender we have a whole picture to look at, how much you have saved, do you have three or more good credit ratings, what is the loan to value, what is your overall credit score. FNMA just imposed a score of at least 580 or we cannot lend, FHA says a score of 540 - mortgage lending is changing rapidly with rules changing daily, but generally FHA/VA are most forgiving and a good 12 month history make you eligible for a loan. In many cases, two years after a bankruptcy (if it was under extenuating circumstances) you are eligible for an FHA/VA loan. With that being said, I am expecting some tightening up on these programs in the near future with all of the foreclosures we are seeing. Auto lending on the other hand is very forgiving, but you will pay a much higher rate for that credit score. Most banks like to see a clean credit report, meaning all bad debts are current and paid. However, there are subprime car loans at very high rates that are being given to high risk consumers.
  14. I have a number of 800-735-2293 - that number is good from 8:00 am - 9:00 pm eastern time. This is the number that Sears gave to me to contact them to settle. You can give them your social security number and they will be able to tell you if they still have your account.
  15. It does stay on your credit for seven years, but if you are making payments as agreed since settlement, it should not be affecting you that bad - maybe you don't have enough credit? Do you have a mortgage? Usually owning a home will help. Do you have at least three creditors showing on your report?
  16. First I would call Sears/Citi and see if they will work with you and try to settle the debt for 40%. If they tell you that LVNV has it and you have to work with them. I would write them a letter and offer them a one time settlement of 40%, if you have it. Sears is owned by Citi and I was able to settle with Citi at 38%, is LVNV collecting for Citi or do they own the debt?
  17. I guess in my process of debt settlement and cleaning up my credit, I was most concerned with settling as soon as possible so that my credit would eventually recover. I have been so disturbed by the whole process of being delinquent and not being able to pay my bills all I've wanted is to just get them settled and move on. I never tried to negotiate deletion since just getting a settlement was a blessing. I will be done settling my debts next month and my credit score is now at 631 - every time I settle a debt and the creditor list it has been settled from delinquent, my credit score has gone up??? It's alright with me and I'm hoping a year to 18 months from now things will be better and my score will rebound. I work in the financial industry and I've lent money to many people who have settled their debts; lenderss typically need to see that they have been clean with no lates for at least a year and they should have had extenuating circumstances that caused the financial hardship.
  18. Good luck getting them to remove everything. Most of them will not budge. I just made it a mute subject and I in did my best to settle the debt. I have been going through this for several months and every time I settle a debt and the creditor reports it, my score has gone up. I should be done settling with my creditors next month and I'm anxious to see in few months what my score looks like. Today it was 631 - this is considered fair.
  19. I have a thread on the subject; it all depends on your financial position; your debts versus your income. I've done a lot of research and also talked to the IRS several times. I am insolvent, but only for the first $41,000 - after that I must pay tax at about 30% of my savings. When it is time to file taxes, I will also use an accountant to lessen my chance of an IRS audit. When you figure your financial position, you have to use the date on the 1099C - my fear is that they will date them at the end of the year and my financial position will have improved and I won't be able to claim insolvency. I called one of my creditors and they assured me they would date my 1099C for the date they took my final payment. So what if I have to pay taxes on the 1099C - I still will be out of credit card debt and still will have saved a large amount of money by settling my debt. Also and most importantly, I avoided a bankruptcy which would have stayed on my credit for 10 years and would have cost me my career.
  20. I settled with all original creditors and gave them my bank info so they could take money out. No one took more than we agreed.
  21. I would take the lump sum settlement - at least the pain is over. You already have late payment history but to settle it will hurt a little but it does recover over time and you get a fresh start with no BK on your record. I know many people who have settled debt and within a year their scores are back to 660-680 which is a start and there is no BK on your record to explain. I don't plan on buying anything until 18 months and then hope to by a used car for cash - so I'm trying to clean it up the best I can.
  22. The IRS will use the date of the 1099C - even it is years later and your situation has improved. In order to be insolvent you have to look at your assets and liabilities the day before the 1099C date - I have been over this with the IRS a few times, their stance is firm on that one. So if you were in a bad way when you settled with the CA, you still have to use the date of the 1099C. This can be a real problem when the creditor doesn't issue the 1099C timely and they date it at the end of the year or something. After settling all my credit card debt by July, if my 1099c's come and are dated Dec 31st - I won't be insolvent any more; something else to worry about.
  23. Quote of Dive Medic 2/10/2006 Just so you know: I had a CA coma after me, and could not validate I sued We settled out of court. I got cash and a delete. This was in Nov 2003 Three months later, I got a 1099c I fought it for 2 years. The IRS told me that it must be my loan, or else the CA would not have had my SSN. They refused to accept that the debt was not valid as a reason to ignore the 1099. They told me it was a "frivolous" argument. I lost in tax court in Oct of 2005. I paid $2,500 in taxes, penalties and interest. I found the above statement from Dive Medic - didn't appear to be an insolvency issue - it appears he was fighting that it was not a legitimate debt.
  24. Sorry Willing - I tried your link and their is no match. However, I did go and look up Dive Medic. His situation was that he received a 1099 from a junk debt buyer and didn't report it because he didn't feel it was legitimate. I didn't see that he tried to claim insolvency?? I have legitimate 1099c's and I will claim what portion I have to as income after I claim my insolvent position. Also one of the important parts of this is comparing the date of your 1099C to your financial situation the day before. The IRS says that date is the date you have to use as settlement. So if I settle with the creditor over the phone on 5/10 and they date it 7/10 - I could be in trouble because I may have settled all my cards and had savings - then my position is solvent. So waiting for the 1099's - I checked with my largest creditor and they told me it will be dated the day they took my final payment. It's kind of tricky, because I had a four month payment plan and of course the debt reduced during that four months so by the time of my final payment my position had actually improved and now I owe more tax.
  25. I have a friend that filed a 1099 and the form 982 and he was never audited and they accepted his return, it was for a small forgiven debt of $8,000. Cancelled debt has always been taxable income and people have been filing it as such for several years. I have read many post on here by you about the 1099 form and everyone is entitled to their interpretation. However, I have also done extensive research and have talked to more than one IRS agent and they have all pretty much said the same thing. Although the IRS does not define assets and liabilities, for the individual it should be a simple formula. They told me that most people that have excessive credit card debt and are forced to do debt settlement are usually insolvent and they see tax records come in all the time where the individual just pays the tax and doesn't fill out the form and the IRS knows that they could have claimed insolvency. The problem lies in defining fair market value of your house and vehicles; people who deflate the values just to not pay tax will be audited. The IRS has automated systems where they research the value of your real estate in the neighborhoods you live in, they also have access to other systems that give them car values and etc. If you were to go to your local multiple listing service and print off three comparable properties, in your immediate and surrounding area that are similar to yours and you go to blue book and you get fair market values on your cars and you put all of this in your income tax file, you should be safe for an audit. Also, you should print all bank statements and retirement statements at point of settlement. To be even more thorough, you should get your current statements on all your debts at the time of settlement, this will insure a safe audit as well. Case law on the subject is constantly changing. First they said that anything that is exempt from a creditor claim need not be included in assets, however, that is not the case in further tax cases. If the IRS sees you are low income, you just settled an enormous amount of debt and you have no dividend and interest income, you are probably insolvent and they will be unlikely to audit you. However, if you show a six digit income, dividend and interest income you probably will get audited. It is decided by the number of red flags on your return. I am very confident with my decision to file the 982 and a worksheet after the many discussions I have had with the IRS and I will also consult a public accountant when I file to further insure that I am not audited.