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New here - I need help!!


jjaaam
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Hello-

I currently have around $78,000 in unsecured debt I would like to settle. I don’t want to file bankruptcy, but I am at the end of my rope. If you look at my monthly budget you would see that I am at least $300 in the hole every month. I currently pay around $1800 in payments. Several creditors are involved (Citi, MBNA, credit union, etc.). At this time I have no cash savings. I have had to stop paying them due to a recent “potential” divorce, and even though I am back in the home, I can’t stand the thought of paying these people minimum payments (with some accounts at 30%) for the rest of my natural life. This month I will be 90 days late on all accounts.

I need some relief. I called InCharge and they basically told me to file bankruptcy. Personally I would, but my wife does not want to. I have gotten her to agree to go the debt settlement route.

Here’s where the questions start:

-I am looking for a reputable company. So far I have talked to Superior Debt Services ($928 a month for 46 months at 15% fee rate) and Debt Settlement America ($1183 per month for 36 months at 15% fee rate). Superior seems better to me at this time as they include a three-cycle credit report restoration at the end of the program. Does anyone have any insight as to if they are on the level?

-My biggest fear is a lawsuit. I have a hard time accepting the fact that a company would be willing to wait up to four years to settle without legal action. Both of the companies listed above told me that, on average, less than 0.5% of their clients get sued. Is this really possible?

-I assume that I have around 40-50k in home equity, but I really do NOT want to touch that. My wife won’t sign for the loan, and since I am already not paying I would have a hard time getting approved. Can I settle even though this equity exists?

-I live in Michigan. Are there any laws against debt settlement? I know there is in regard to debt management.

-3 to 4 years is a long time. As my situation potentially gets better, won’t the companies that have waited the time for me to build up my account see that I may have more on-hand cash and not be willing to settle?

-Both of the above companies state that I will be able to get out of paying taxes on the forgiven amounts as I am pretty much insolvent. Is this true? If so, how would I go about proving it?

-Which is better: a three-year or a four-year program?

-I was thinking about waiting until the accounts are almost 180 days out before starting the program so I can get some emergency cash saved up as I have NO resources to fall back on if anything happens. Is this a bad idea?

BTW... I sent this as a PM (with other questions that cannot be answered here) to sifmxpert (sp?)...but I wanted to get insight from others as well.

Thank you so much!

Regards,

jjaaam

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Start with the assumption that ALL "debt handlers" are scams. None of them do anything you can't do, and all of them will ruin your credit. Some of the scammier ones will even take your money, do nothing, and get you sued.

The two you've talked to have already given you evidence of their scamminess. Yes...it is true that if you "settle" with a creditor for less than the full amount and you can prove insolvency, you do not have to pay taxes on forgiven portion of the debt. What they didn't tell you is that its the IRS that gets to determine if you're insolvent. In general, if you have a job and you pay taxes...you're not insolvent.

So...what to do?

Sit down, work out a reasonable budget. Cut back on any nonessential you can. See how much money you really have to work with. Call each of your creditors and ask for their "hardship" department. See if you can qualify for their programs that let you pay 0% and lower payments. Most have a deal that will run 9-12 months. If they ask for more than your budget says you can pay, try to negotiate. Pay close attention to what they offer, because if you screw it up, you'll be back to square one. If it will work, go for it. If it won't work, then come back for another suggestion.

And...for the record...sifxpert is a debt handler...

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So...are you saying that sifxpert is a scammer?!? :?::?:

Is there NO ONE that is legit as far as debt settlement is concerned? I don't have the time or the nerves to try and negotiate with eight creditors for years on my own.

The bottom line for me here is that I can't fathom paying these jerks anymore.

For example:

National City. I was late by less than a week about two years ago. Made the payment no problem. got the next month's statement and found that my APR went from 9.99% to 24.99%. I called them and I was told that as long as I pay for six months they would analyze the account and bring the rate back down to the original.

Six months went by without a hitch. Did they lower my rate? Of course - to 21.99%!! I called AGAIN and was told that was as low as they would go. Over $200 of my $300 payment goes in their pocket. I was LIED TO. :evil:

Sears Mastercard:

Ran a week late back in September. Got the statement that said the APR was raised from 14.99% to 30.49% and that my minimum payment to get everything current was $861.00. I called them and I was told that if I paid $at least $599 by the due date they would post a "match pay" of the same amount (basically a credit) within 30 days. I borrowed $1000 from my parents. Guess what? STILL no match pay on the account. I was LIED TO AGAIN. :evil::evil:

So.....who is the bigger scammer?

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For the credit card company compaints about APR, I would contact the Comptroller of Currency. Their web address is here: http://www.occ.treas.gov/

They will launch an investigation for the APR's for you.

I was in a similar situation with my divorce. I could not afford to pay for the 2 cars, spousal support and all of the cc's. I made all of the payments for the necessities, but stopped the cc's all together.

They have all been charged off and sold to or assigned to collection agencies. I bought a new tape recorder so I can record all of their voice mail messages to have as proof of their deceptive practices. So far, I have had someone leave a message stating " I will call all of your neighbors until this debt is paid" and a bunch of other messages where the collectors are posing as attorney's when they work at a law firm, but are not attorneys. Etc....

So far everyone I have sent a DV notice to has backed off. Some of the real nasty CA's that have left the messages, I am going to start to sue for violations of the FDCPA plus damages. Believe it or not, even some of the letters which they send are not up to thee FDCPA standards and do not have the appropriate wording. I am going to use the court awards to pay for some of the legitimate debt such as the ones which were assign to a CA and not purchased.

When the OC sells the debt for pennies on the dollar on your account, how much do you honestly think you should pay for the account ?

It really depends on how much of a stomach you have for it, but when you have no choice, you have to do what you have to do.

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jjaaam: I don't actually think sifxpert is a scammer...but...you do need to realize that he does get paid for what he does, and his method of handling debt still subjects YOU to 3 to 6 months of nasty phone calls from the original creditors, and that what he does will actually make your credit worse, and that he sometimes leaves out details (like the IRS ramifications of debt settlement) in order to get your business.

The bottom line is sifxpert is not in business to do you favors...he's in business to make money. In fact, if you haven't to have a creditor that he can't deal with, he won't take your case.

So...in my opinion...save the money that you'd have to pay a "debt handler" and handle this yourself.

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You've got three choices...

1. BK 13

2. Call the CC companies. See if you can get on their hardship programs. Then either make more money or cut back on expenses so that you can pay them off.

3. Stop making payments. You'll then start get collection calls...at first from the OC...then later from the CAs. When the CAs call, you then use the debt validation process (there's a flow chart around here somewhere) to catch them in their lies and crooked ways. Sue them. Collect enough money from the suits to pay your bills. The DV process isn't a full time job, but you will have to spend 8-16 hours a week on. And, you might get sued...

The bottom line is there isn't any magic formula to get you out of this mess. It took a few years for it to pile up...it will take a few years to fix. And paying somebody to do it for you, with no gurantee that they can fix it all, is not a good idea...

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The bottom line is sifxpert is not in business to do you favors...he's in business to make money.

There is no doubt that sixpert is in business to make money. Question Will, do you go to work for any other reason? Sixpert may indeed work to make money, but that is not why he is on this board. From everything I have read from him, he has give honest, straightforward answers which I perceive have been extremely helpful to many people.

Not once have I seen a post from him that solicicted business for his company. My perception is the man has shared his considerable knowledge and experience for the sole reason of helping others who desperately need it, without any vested interest in the answers he has given. In return he gets put down by you. Why?

I do not wish to get into any kind of a fight over this. So, kindly provide evidence that sixpert has ever, in any way used this board to solicit business for his company. If you can, I simply missed it and I offer my sincere and humble apology.

If not, how about you give the man credit for the help he has freely provided instead of grief.

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You won't find any. sifxpert and myself hammered that out already from the get-go.

First and foremost, this is a self-site. Members exchange information and experience to help others "do it themselves".

Second, it's common knowledge who's behind the majority of these settlement companies - it's the creditors.

But settlement is a part of the equation, and since we do not advocate "never pay your bills", the option to settle has to be there in all fairness to the membership.

sifxpert explained what's he's about and I told him our site policy. I or the other Mods or Admins have yet to receive a complaint about him.

So let's end this now before it gets outta hand.

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Hi jjaaam,

It appears your thread has been side-tracked away from your needs to a discussion about another industry poster and his true motives. While it's true he is very knowledgeable in this arena, contemplating his contributions offers you no immediate assistance.

Here's what I know... Under MOST if not ALL circumstances, ANY negotiation or alteration of the existing payment terms with these "lenders" will negatively affect your credit reports. Hey... but wasn't it your good credit that got you here? Credit can be cleaned up later, so not to worry.

Negotiation works... just not the best (50 to 60% saved max... and be prepared to deal with 1099's for the difference in most cases (adds 25 to 30% to the difference)). Here's a Question... Do they guarantee the date you're debt free? Better read the fine print... NO ONE DOES! Also... what if the creditor(s) WON'T NEGOTIATE?

There ARE legal strategies for dealing with this situation. You must continue your research. Keep a healthy level of skepticism, and at the same time, an open mind. Think Outside THE BOX! I'll refer you to a thread that appears here: http://debt-consolidation-credit-repair-service.com/phpBB2/viewtopic.php?t=28012

Please do not let uneducated naysayers rule your thinking.

You CAN WIN!!!!

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Guest sifxpert

I appreciate the kind words everyone. I've dealt with the criticism for some time and due to the reputation this industry has...its deserved. I do not like most of the members of the Debt Settlement industry. I've said this before and I will say it for the final time...we're all not alike. I have my own reasons for my participation on this forum and anyone who gets to know me here will figure it out eventually.

With that said, Hypnotist could not have said it any better. Settlement is a viable option for many but it certainly has its drawbacks.

Your credit will suffer and the chances of getting sued are highly likely with a high amount of debt and many creditors. Especially dealing with Citi and MBNA. Another factor is that most Credit Unions do not settle. Not knowing this and waiting things out for a time to settle would hurt you with all of the interest and penalties adding up.

Point being, if you are considering this on your own do your due diligence and look to find information pertaining to your specific creditors. Do not generalize and think each creditor works the same. They do not. Find info on each of your creditors on this forum or others and put the pieces together on how to handle each one individually.

You could also post the list of creditors you have and I can tell you how to handle each or you may PM me your list with balances and I can explain what your strategy should be.

Someone posted something very interesting earlier...you will invest 8-16 hours per week (or per month? cant remember) in handling your accounts. Think about it...I have 4000 clients. That was a very true statement too by the way. Now I do think some companies prices are through the roof but there is a ton of work that goes into this process so the fees are somewhat justified if the company does a good job.

When looking into a potential co. to hire to help, I always say not to hire a CCCS program because it is the same as you can do on your own. You can always get the OC to lower interest a little or a lot. CCCS get 0% with Amex and B of A. These are good but all the rest are usually 9% and higher. MBNA is terrible at 15% I believe.

When considering a Debt Settlement co. always look at the BBB report. Make sure they have been in business for at least 3 years and have very little complaints or none at all.

Also, do not choose a co. who charges their fees on a flat rate schedule such as 15%. Always go with a performance based fee structure.

The flat rates usually collect their fees within the first 15-18 months leaving you with no money to settle in case a lawsuit is filed and then when you are served, you paid 1000's and the co. tells you to find an attorney. What? Yes, thats right. They also have no incentive to settle and if they ever get around to settling your account what incentive do they have to get you a good settlement? None.

As far as the 1099's, each creditor is required to issue a 1099 for any portion of a forgiven debt in excess of $600.00. In my experience, most do not do this. CA's never do it and most OC's do not either. I would say 10% if that do.

Please do not take this as a guarantee but in my experience, it doesn't happen very often.

I will also say that if you do not do your homework on a 3rd party to help with your debts, you will probably get shafted.

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  • 7 months later...
Guest ki--mya--
You won't find any. sifxpert and myself hammered that out already from the get-go.

First and foremost, this is a self-site. Members exchange information and experience to help others "do it themselves".

Second, it's common knowledge who's behind the majority of these settlement companies - it's the creditors.

But settlement is a part of the equation, and since we do not advocate "never pay your bills", the option to settle has to be there in all fairness to the membership.

sifxpert explained what's he's about and I told him our site policy. I or the other Mods or Admins have yet to receive a complaint about him.

So let's end this now before it gets outta hand.

I wonder why Doc is not here anymore???? I read a post from when Doc left the board someone said it would never be the same and it hasn't.

Sif has never accepted money from collectors and never would. I work with him. If you knew what we did, you would then know it would never happen. Good idea for the collector but it just never happens. Bpttom line, we work on performance based fees. The lower the settlement the higher the fee...the lower the settlement the more money the client saves in the end. Collectors know how we work so they want to go as high as possible. Its a battle every day. Second, members who he has helped owe him far more than he has accepted and never once picks up the phone or mails a letter to collect. To date after nearly one year sif accepted $5200.00 dollars. We added it up last night. Total active clients from the board 3. How many completed 8. One of which paid $1600.00 on a 13k account. 10% settlement and the account was in litigation. Sif had his attorney get it tossed for him. You guys are so ridiculous. You lost one of the only honest people in this industry who posts nothing but truth. Information you can not find anywhere else. See username.

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