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What if I have money to settle? Advice please.


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I've come to a point where I'm maxed to the limit - $135,000 in cc debt, I want to settle this mess once and for all - I've been able to tap into my 401k loan and a possible home equity line. I cannot keep up with the monthly payments and I live on a commission and my income has dropped 50% this year, due to the failing housing market ... I will soon stop making payments on my cards because I don't have enough income to support this debt load - Many of my cards I've had for several years - I've never had a late payment - when I stop paying the credit card companies they will probably give me a hard time because I've always paid timely. I've talked to a DS company and I've contacted a Bk attorney - the BK attorney says debt settlement is the best option for me and he highly recommends doing it myself - he says creditors like to deal with the customer - third parties like himself and or DS companies sometimes make it more difficult to settle and it takes longer. Although I'm scared to do my own debt settlement and wanted someone else to do it - I've now been advised differently, the DS company says I'll end up getting sued if I try it myself. I'm assuming that if I have money to settle for less, they will be less apt to sue me? Any thoughts or experiences on this from the group?

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DS companies...the "debt fixers"...want you to pay them to settle your debts. Therefore, they're inclined to gloss over anything and leave out details that will make you reluctant to use their services.

First...understand that debt fixers are actually collection agencies that have decided its easier to take money from people who think they are helping than from people they have to browbeat into paying them. Just like collection agencies, they have "understandings" (e.g., contracts) with certain creditors. If all your debts are owed to their customers, they will be able to negotiate a "settlement" for you...if some of your debts are with creditors that don't deal with this particular debt fixer, you get sued.

Second...understand that using a debt fixer negates all the protections afforded you by the FCRA and portions of the FDCPA. In effect, the creditor gets to say how much you owe...period...and you cannot use those laws to fight any mistakes they may make.

Third...the debt fixer "encourages" the creditor to settle for less than the full amount by having you claim "insolvency". (Your liabilities are greated than your assets...duh...whose aren't). The debt fixers suggests the creditor better take what they can get before you file BK and they get nothing. (Some creditors are beginning to wise up to this. If you're credit reports say otherwise, you get sued).

Fourth...the debt fixer gets a percentage of the "savings" for their fee. This is usually 10-30%.

Fifth...you get to pay taxes on the "savings". The IRS's definition of insolvency is different than the debt fixer's. The debt fixer's fee is not deductible.

Bottom line....do it yourself.

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