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Settling old credit card debt


craftyb80
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I'm 25 yo, and currently making just under $30,000/year. I have just under $10,000 in debt, which includes some old medical bills and a $1,000 student loan, but is comprised mostly of old credit card debt split between Citi ($2,246), MBNA ($2,462), Chase ($1,544) and Cap1($636). These accounts were closed in 2003 and I have recently received settlement offers from collection agencies on some of these accounts, some as low as 50 cents on the dollar, but are still beyond my capability to pay in a lump sum. I have considered re-enrolling in CCCS, but was wondering if I should attempt to negotiate a payment plan directly with OC or CA, or follow the DV procedures outlined in other posts

I am also wondering how past participation in debt consolidation programs (Ameridebt in 2001, CCCS in 2003) can effect the SOL. About six months into CCCS, I became unemployed and could no longer make payments through the program. Would any payments made through CCCS effectively reset the SOL?

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SOL depends on your state laws...in some states, making ANY payment resets the clock...in other, no. You'll have to check...

And...IMHO...after trying to settle this through two different settlement companies...I think maybe you should try on your own this time. Not that another company wouldn't take your money, its just that they're all scams and you're better off on your own.

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Thanks for the reply - going through the message board, I've come to realize just how blind I've been flying here. I only wish I'd have found this place sooner!

Quick related question: In attempting to negotiate a payment plan, am I better of going to the OC or the CA, and how likely are they to accept a payment plan on seriously delinquent credit card accounts such as mine? Further, are settlement reductions and payment plans mutually exclusive (i.e., if i pay in installments, will I likely forfeit the reduced settlement amount?)?

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It does depend on just how long its been, but usually you have to come up with the whole amount in one payment. Installments are not an option.

You need to get your credit reports and see just how these are being reported. If they're "sold to another lender" then you're dealing with a junk debt buyer (JDB) who you really don't owe anything. If they push you, you may be able to settle for as little as 10%, but there is really little incentive for you to do that. They can't improve your credit rating, and you have to make sure that you get everything in writing.

If the OC still owns the debt...IMHO...never settle with a CA...you just can't trust them, and they do nothing about improving your credit. Always deal with the OC...and if they insist that you have to deal with the CA, send the OC an offer letter CMRRR. You might wind up getting sued, but at least you'll have proof that you tried to work it out and they refused.

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Guest sifxpert
And...IMHO...after trying to settle this through two different settlement companies...I think maybe you should try on your own this time. Not that another company wouldn't take your money, its just that they're all scams and you're better off on your own.

CCCS and Ameridebt are Debt Consolidation programs. Big difference.

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sifxpert and I have been around this block many times.

Yes, there are "debt consolidation", "debt counselors", "debt eliminators", "debt negotiators", "debt settlement", and a variety of other names by which one company tries to differeniate itself from another. They all claim to help you get your debt handled, one way or another Some are funded by the major credit card companies...some are not.

Yes, in some cases you may wind up paying the debt handler and the creditors less than what the creditor says you owe.

But...

1.)All the debt handlers charge you money.

2.)You may get sued by a creditor and most debt handlers won't help you with that.

3.)Your credit report winds up trashed.

4.)And, you may wind up owing taxes on the "forgiven" debt.

IMHO, given 2,3, and 4....save your money and do it yourself.

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Guest sifxpert

The best thing you can do for yourself with such a low amount of debt is pay yourself a comfortable amount each month into a separate savings account. Once you have 30% of the amount owed on your most recent statement for any of the accounts, call the CA and offer them 30% and state your hardship. Settle it for no more than 50%.

Do not DV Citi. You willend up getting sued. Do not have any conversation with any CA assigned to that account. Ignore them until it is either sold or until you are ready to settle.

Keep saving your own money and settle them one by one.

It would be pointless to pay the full amount and it would be pointless to contact a CCCS to help. Your credit is already effected. Do not pay the full amount.

Citi settles for 50% always. I'm pretty sure MBNA was sold already. Do not settle higher than 30%. Chase may have sold already if not either way you are looking at 35-40%.

You can contact me with the CA's handling the accounts and I can possibly give you some good contacts to help get easy settlements.

Do not set up payments with any of them. Settle.

Contact me if you need help getting this done.

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What sifxpert is suggesting is a typical "debt handler" ploy. "Save money, let them hassle you and trash your credit, and them MAYBE settle at some later date". I'm not saying that doesn't work in some cases, but realize that it will put a severe dent in your credit reports.

Also...be aware that sifxpert is a "debt handler". He may want to charge for his "help".

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Willin, could you give the pros and cons of settlement verses DVing and dealing with CAs from your perspective. I greatly respect your knowledge and experience, but am confused as to how either approach will protect or repair ones credit scores.

I personally have been settling my accounts instead of BK13 for various reasons. I view the settled accounts as less harmful and more reasonable than a BK13 in which I will have to repay every penny anyways.

Gettinout

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Starting at the end, a BK13 does not require you to repay every penney. You and the BK trustee work out a payment plan that MAY be less than the full amount. However, a BK13 does severly impact your credit scores.

But...having a "paid for less than full amount", or "paid as agreed" with an amount written off, dings your reports. And a "paid collection" also dings your reports. Both are about equally bad.

Paying a CA is never a good idea because a.) you can't trust them to actually apply any of the money to the OC's account, and b.) any unpaid balance may be sold to a JDB. You only pay a CA or JDB if you absolutely positively have to clean your reports, and they will accept "pay for delete" and they agree to not sell the balance, and you get everything in writing before you send money.

As for paying the OC...the best settlement (for you) is a "pay for delete". Most OCs won't do that. Many will however agree to remove all penalty and interest charges above what you actually borrowed. If you do settle with the OC, second best is a "paid as agreed". Third is a "paid for less than the full amount". In all cases, demand that they issue you a 1099c for any amount of the debt "forgiven". Yes...that will mean that you will owe taxes on anything over $600 but it will protect you from a JDB should the OC sell the balance.

Will all of this help your credit reports? Only if you get a pay for delete. Lacking a PFD, your reports will suffer for a couple of years.

On the other hand, you live in CA. As I understand it, in CA, an OC can be held accountable for the actions of its CA. So...if you use the DV process on the CA and they screw up, you may be able to sue both the OC and CA and make some money...or at least get them off your reports.

Bottom line...it ain't simple. You need to read, read, read, and understand all the great info presented on this board and use it to your advantage.

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Guest sifxpert

I could tear this last post up but I don't have the time. I just want to know on what grounds you can make any of these statements? What solid, black and white evidence backs up what you wrote? I'm really curious.

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