Q's on credit card companies offering settlements

[HereInOhio]

Can this happen?

Our neighbor mentioned something about one of his credit card companies doing this. He just stopped paying them monthly and the company came to him (I'm not sure after how many months) and offerend him a settlement (I think that's how you word it).

He had to pay something like 30 cents for every dollar.

Really, our main problem is one friggin card. We'd hate to file over one dang card (yes, we have other credit card debt, but can pay that with time....a lot of time....but time none the less). Plus, DH cannot, and I mean CANNOT, afford to lose his company credit card. So this makes things very sticky for us.

I'm not sure what to really look up to try and find more information on this. Can anyone shed a little light on this?

[justplaintired]

Quick question, isn't your DH company cc in the companies name and not his? Why would you have to file on a card that you are only an authorized user on, being an authorized user I didn't think that was the same as being the card holder. I would check into that. The other cards you're talking about that are yours would also be in a BK. The trick is how much debt are you talking about? If it's a manageable amount as a whole, then BK may not be the answer, but if the grand total is overwhelming, then BK may be a wise choice.

[Flamingo]

What you are mentioning is debt forgiveness. First, by not paying your bills for several months will mess up your credit really bad and that will be on your credit reports for quite a while - at least 7 years. Secondly, in debt forgiveness, the creditor will negotiate with you to forgive a portion of your debt. However, what you need to realize is that the forgiven debt will be considered income to you in the year the debt is forgiven. Say for instance you have a $10,000 loan with Bank X. Bank X negotiates with you to forgive $5,000 of the debt with you paying back $5,000. You will receive a 1099 from the creditor on the forgiven $5,000 which you wil have to list on your taxes.

If you have manageable debt and believe you can get out of it within five years, I would suggest trying not to file if you are able to keep up with trying to pay it off. I would certainly make it a priority and cut up the cards and get down to business in utilizing a budget to get the debt down. If you really put your mind to it, you can do it. Most people that are faced with filing BK have large debt and something happens to cause them to be unable to keep paying the debt or are just unable to pay for it - i.e., job loss, cut in hours, serious medical issues, etc. or something causes huge debt that is beyond one's control (i.e., major medical situation).

[keepmine]

A major fly in this ointment is, creditors wil pull your credit report and if they see you paying unsecured creditors and not them, they'll not negoitate. They'll likely sue sooner rather than later.

[HereInOhio]

First to justplaintired:

His card is in his name with his SSN. That's where our problem is. If he loses the card, his job is in jeopardy.

I didn't know about having to file it on your taxes. Thanks for brining that up. Like I said, a neighbor mentioned it and we didn't know anything about it.

We have 14,000 on this one card I'm speaking of. Things were fine until they raised the % rate to 29.9% (said they sent out a letter stating it was going up and that we had to respond in order to keep it at our lower rate). Well that is what is screwing us. Now, with paying that single friggin card, we are coming up short each month (and we fail the means test significantly). But we make more then the median income for a family of 2 for our state.

So this is our delima. That's why I'm just bouncing a few questions off of you guys and searching the forum like crazy.

[Flamingo]

Cancel the 29.9% card right now. Make a commitment to buckle down and get that card paid off. If you don't and continue to charge and accrue fees, you are heading right down the slide to disaster eventually, especially if you open up other cards or don't curb your spending. Right now, unless your hubby's other credit is bad and the creditor pulls his credit report once in a while as most do, his business card is safe unless he misses payments on it or he or you both file BK.

All it takes is a job loss or cut back in hours to make reality hit for you. Been there - get yourself out of the line of fire now in case that occurs.

[HereInOhio]

How can we cancel the card if we still owe on it? We haven't charged anything on this card in like 8 months. We put a hot tub on it back in September and that is where the $14000 came from.

Like I said, it was manageable until this interest rate skyrocketed.

There are so many unanswered questions! Just a lot of research to do....that's all.

[HHM]

LOL, you put a hot tub on your husbands business credit card.

Is this your husbands business?

Are all you cards at 29%?

Here is the problem (unless you provide more background), the only way to motivate settlement is to go into default...that default will likely trigger your other cards to jack their interest rates to %29+ (its called a universal default position, you go into default on one card, all your cards get hosed). If your debt load is relatively manageable, you may need to consider doing a balance transfer with a promotional rate.

[HereInOhio]

Oh god no!!! It's not his business card that we put the tub on! His business card is just that.....it's very strict and he has to account for every single cent spent on it with reciepts and a huge spreadsheet turned in monthly.

It was a personal card that had a very low interest rate but then it got jacked up.

None of our other cards are anywhere near that rate.

That's what we've been thinking of is a balance transfer, but I'm not sure we can find a card that will start us off with that amount of credit available.