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Settlement for All or Some


jameseiv
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Hello All,

This site is great and extremely informative.

First time post, long time browser. The economy caught up with us finally and my wife and I are going to start the settlement process with the two largest credit card holder we have, Chase($30000) & CitiBank ($18000).

We also have other credit cards with not such a large balance from Discover($5500) and US Bank($1500). My question is, do we start the process with all cards or can we do just the ones with the largest balances that we can't afford the payments on? What is the usual practice? I have read that the card companies actually use your credit report to view if you are behind on anything else to decide on the settlement amount. We can barely make it through the month paying monthly payments and need to do some homework on settlement. Help is appreciated.

Jim

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Hello All,

This site is great and extremely informative.

First time post, long time browser. The economy caught up with us finally and my wife and I are going to start the settlement process with the two largest credit card holder we have, Chase($30000) & CitiBank ($18000).

We also have other credit cards with not such a large balance from Discover($5500) and US Bank($1500). My question is, do we start the process with all cards or can we do just the ones with the largest balances that we can't afford the payments on? What is the usual practice? I have read that the card companies actually use your credit report to view if you are behind on anything else to decide on the settlement amount. We can barely make it through the month paying monthly payments and need to do some homework on settlement. Help is appreciated.

Jim

Are you currently making payments on any of the cards? Do you have a lump sum that you can offer to any of the companies?

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This will be the first month that I will not be paying CitiBank and Chase. I will have lump sum money, up to 15K, in March via bonus and tax refund. Chase already has us on the hardship program at a fix 2% a month and same payment for over 1 year now and it barley makes a dent in the balance. I am considering the Discover card also, but am unsure. Also, where do I find more info on the tax drawbacks to settlement? Can that be avoided at all? Thanks ahead of time for the advice.

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This will be the first month that I will not be paying CitiBank and Chase. I will have lump sum money, up to 15K, in March via bonus and tax refund. Chase already has us on the hardship program at a fix 2% a month and same payment for over 1 year now and it barley makes a dent in the balance. I am considering the Discover card also, but am unsure. Also, where do I find more info on the tax drawbacks to settlement? Can that be avoided at all? Thanks ahead of time for the advice.

$15,000 is a nice sum, but you don't have it right now. You may want to see if the other cc companies will do the same thing Chase is doing for now.

When I was in your situation, I had a small lump sum. I arranged a settlement on my smaller balances, and paid those settlements off. I still had a little left over. I then arranged settlements with the larger balances and used the remaining lump sum to pay down one of the settlements.

By getting rid of the small cards, I no longer had those minimum payments every month. I took that same amount...let's say they added up to $150 a month...and added that to what I was already paying on one of the larger cards. That brought that balance down much faster.

Think about this. Wait until you have the money, and then see what settlement you can work out with Discover and US Bank.

Just as an example, if Discover and US settled for 50%, you'd have over $10,000 left. You could either use that to pay down Chase, OR you could offer it to Citibank as a settlement. Who knows? Citi might take it. That would leave you with nothing but Chase. Everything you'd been paying to the other credit cards could then go to them.

Tax consequences? I don't know the name of the form, but the forgiven amount could be added to your income. If the debt is $5000, and you settle for $2500, the forgiven $2500 would be extra income. Something like that.

Just some things to think about.

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Hi jameseiv, I think you should enroll all the Credit card companies with your settlement program. The reason for this is Credit companies agree to debt settlement believing debtors have a poor financial condition.Now suppose you enroll two companies, and continue paying the others, what will those companies within your settlement plan believe? They will believe that your economic status is not as poor as your are being able to pay the other creditors.

So please keep these factors in mind and discuss with your debt settlement company before taking the final decision.

As far as my experience it will be better to enroll all the creditors rather than selecting any two.

This is just my opinion. The final choice is yours.

Best of luck!!:D

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Thanks for the advice from both of you. I am going to have to sleep on this because they are very good points. I don't have the money to pay Chase or CitCard right now anyways. I know I did read they use your credit report to see how delinquent you are on other accounts. Thanks again to you both!

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Just to add to my previous post, settling a debt won't remove the negative entry from your credit report. The entry should state "settled" or "settled for less than original amount"...something like that.

What that will do, though, is show future creditors that you didn't ignore your debts. Some potential creditors might (not guaranteed) look at you more favorably as a result.

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