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80% forgiveness offered by OC-Questions


tressy
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Hi all. New to forum. New to credit problems. I became unemployed in May 2006. Kept bills current out of savings, and then illness struck and I depleted savings and maxed out credit card. Bills are now 90 plus days late. Called credit card company, and advised them of my situation unemployed/ill and they said based on my history with company they would forgive 80% of my debt provided that I paid the settlement offer within 6 months. They also offered me a reduced payment option which lowers my int rate from 11% to 4% and min pymts are lowered roughly by half--I'll have 60 mos to pay it off. The #s:

-amt owed=$15k

-settlement offer=$3k ($500 for 6 mos)

-reduced pymts=$280 for 60 mos

On it's face the settlement looks good to me, seems like a no-brainer. But, am I missing something? Why would they also mention the reduce pymt plan? I asked the rep and she said that the settlement would mar my credit for 7-10 years and be listed as "settled", which is a negative; whereas, after 5-6 consecutive pymts on the reduced pymt plan the payments will show current and at the end of 60 months the acct will show "paid in full". She also mentioned that I would receive a 1099 for the forgiven amount if I choose the settlement.

I will be working again soon--yeah! Family has been helping me some during my hardship. Since I am able to work again, family will probably loan me what I need to get started on one of these plans. The credit card needs a settlement pymt or reduced plan pymt by 10/15/07. They told me they could no longer hold the account after the 15th; I suppose meaning they will sell it to a collection agency.

You guys are extremely knowledgeable and I would appreciate some guidance/tips based on your experience. Specifically:

-pros/cons of each of the offers

-is a "settled" on the credit report really as bad as the rep stated

Thanks!

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You look like a potential bankruptcy to the creditor. They are trying to get what they can on terms that work for you. Are you going to be able to pay the tax? If you think creditors are difficult to deal with, just wait for the IRS to get involved. You have consumer protection laws when creditors are involved. The IRS is an entirely different ball game.

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You look like a potential bankruptcy to the creditor. They are trying to get what they can on terms that work for you. Are you going to be able to pay the tax? If you think creditors are difficult to deal with, just wait for the IRS to get involved. You have consumer protection laws when creditors are involved. The IRS is an entirely different ball game.

Thanks. The tax piece is something I had not considered. Since, I will be working again soon, I will be able to afford the $280 monthly payments, which I suppose amounts to a low interest (4%) 5 year consumer loan. Plus, doing that would help me start rebuilding my credit rating since after a few consecutive pymts they will report it as current. Before I took ill, I was self-employed and I already have an IRS debt, and I do not want to add to it with this $10,000+ forgiveness. Excellent input--thanks again.

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A little off topic, so don't mean to hijack the thread but just responding to Aisle4's thing about the IRS. I've had to deal w/ both IRS and CA and honestly I'd rather deal with the IRS. They were willing to work with me on a payment plan with decent interest (8% back in 2001). That is my experience. HOWEVER, that being said, depending on the situation, you are probably absolutely right. But my experience with being unable to pay a decent sized tax bill was good with the IRS. But you have no choice, they get their money no matter what. So it probably depends on the situation, you won't get out of it like you possible can with a JDB.

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If you have an IRS debt and don't have the money or can't work out a payment plan that works for you, you can be in for a world of hurt. A CA or JDB has a lot of hoops to jump through to get to your money, and there are some assets that they can't touch. The IRS can pretty much get their paws on anything.

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Aisle4 - Gotcha that makes sense then. I guess I can totally see that now if you can't afford anything. When I got my large tax bill, I had been laid off and out of work for a few months, now that I'm thinking about it, they did require a payment plan, I tried negotiating and putting off, they wouldn't do it, but we did work out a plan that was "fair" and they got a few years worth of tax refunds too. Thanks for the info, that makes sense now.

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