cindyda1 Posted April 9, 2007 Report Share Posted April 9, 2007 First of all, thanks for all the helpful, informative advice here..I have learned a lot. I am also trying to pass information on to my sister who has been strongly advised to file bankruptcy..she wants to avoid doing this by first trying to negotiate her cc debt down...she is going into her 2nd. month of late pmts. Her biggest debts are with Chase and Capital One..she has already received one phone call telling her the account is getting ready to go into collections..Can anyone give any tips on dealing with these 2 co's. on debt settlements?.....Also, should she contact them now or wait another month or longer? (I have read contradictory opinions on this)She is willing to take money out of her IRA to pay these debts if they will settle., She is scared to death to try and deal with these co's. on her own. Link to comment Share on other sites More sharing options...
AISLE4 Posted April 9, 2007 Report Share Posted April 9, 2007 Chase is easy to settle with. Cap1 is a bitch. The accounts are not delinquent enough at this point to talk settlement successfully. It'll help if we know how much debt is with each creditor. Link to comment Share on other sites More sharing options...
cindyda1 Posted April 9, 2007 Author Report Share Posted April 9, 2007 Thanks for the info.....she has approximately $20,000 of debt with each one..both capital one and chase....If you say it hasn't been quite long enough to settle with them successfully...are they bs-ing her saying it is ready to be turned over to collections at this point? Link to comment Share on other sites More sharing options...
willingtocope Posted April 9, 2007 Report Share Posted April 9, 2007 Probably not...but "turned over to collections" only means that they're going to get one of their "hired nags" involved with calling her trying to collect. Usually, OC's will try for 1 to 3 months...then they'll get a CA involved. She will be able to "settle" right up until the point where they sell the debt to somebody else.OCs and CAs will use terms like "send it to collections", "charge off", "get legal involved", etc, just to intimidate people into doing things they might not have to. Link to comment Share on other sites More sharing options...
cindyda1 Posted April 9, 2007 Author Report Share Posted April 9, 2007 So you think she should start making contact at this point and ask about a settlement...but expect to haggle with them a couple of more months?...If she owes $20,000 to each...do you think she has a shot at getting them to agree to $6,000.00 settlement on each?...If they won't..she will probably have to file bankruptcy anyway...don't know if it's worth taking a chance or not...Taking money out of her IRA to do this is a killer for her..that is all she has..but she is willing to do it if it will keep her from filing and give her credit a chance to rebound. Link to comment Share on other sites More sharing options...
willingtocope Posted April 9, 2007 Report Share Posted April 9, 2007 If she settles $40,000 for only $12,000 ... she will owe the IRS tax for the $28,000 in found income ... plus, tax on the money she takes out of her IRA ... plus 10% penalty for early withdrawal. So, in effect, she'll be paying taxes on the full $40,000 plus the 10% penalty. I'm guessing the "settlement" using her IRA will probably cost her closer to $30,000. Not a good deal.BK sounds like a better option. If she has income, it would probably be a BK13, which means the creditors would get paid something anyway, but she'd have the BK court to protect her. The IRA might even be safe... Link to comment Share on other sites More sharing options...
cindyda1 Posted April 9, 2007 Author Report Share Posted April 9, 2007 wow!...This is true.....her IRA is the only place she can get the money....Guess she's in trouble..and needs to bite the bullet and file bankruptcy...she is coming out of a bad divorce settlement and only has child support income right now...according to het lawyer, her IRA is protected as well as her home..other than cc debt...she has a car that is leased..any other options please throw them out there..... Link to comment Share on other sites More sharing options...
Recommended Posts