Credit Card Round 2

[Spyatu]

I'd had an outstanding balance of $30k with a credit card company and they offered us to settle for $8.5 which we did, I'd been trying to get the same solution with Citi for the same amount but they continue to refuse, over the phone they had made me many promises only to back out of them once I call with the needed information, they then start to call me with abusive language, that happen twice and I immediately called them back and reported the incident, now they have a collection agency calling, the true is that I don't have the money to pay at the moment period as my pay got cut, even that I called them before that happen.

From here what will be the consequence's of not resolving this matter any time soon ? besides the credit score which is out of the window already.

Thanks in advance

[lrprn]

As you continue not paying the credit cards, the collection attempts will increase greatly. Eventually one or more will take you to court to get permission to garnish your wages to pay the debts (how much they can take depends on which state you live in).

Also since you settled with one credit card, I hope you are aware that the IRS will charge taxes on the $21,500 dollars forgiven like it was income.

Depending on what your income has been from all sources over the last six months, what kind of secured assets and equity in those assets you have, and what your living expenses are, filing Ch 7 bankruptcy to wipe out all your unsecured debt at once might be an option. Have you checked into that yet?

[inevitable]

Again, not to fault you but this is exactly why debt settlement must be a carefully orchestrated maneuver. You may find that you will now get a 1099-C and may owe taxes on the amount forgiven along with (unless you had an agreement to the contrary) they may sell your forgiven debt to someone else and now you still owe the $21K you thought you settled.

To the OP,

Dont let this scare you at all.
If you can show the IRS that your are insolvent (bankrupt), the 1099's are worthless. If you have proper documentation, the forgiven debt sold to someone else is also just as worthless, just save all your documentation and do it right, or hire a lawfirm to represent you in a debt settlement case. If the forgiven debt is sold to another collection agency, then just let them sue you, and bring your settlement documentation to court with you, their case will be thrown out. If your'e not insolvent, then yes you will need to pay more in taxes as you will be in a higher tax table, but it will most likely be much less than you think.

[njguy1972]

Feel free to refer to one of my prior posts. I settled all my cards and was able to avoid bankruptcy.

http://www.bkforum.com/showthread.php?t=40583

I intend on showing the insolvency that one of the other postes mentioned through IRS form 982 using the worksheet from the 4682 booklet. Basically they look at your assets and liabilities at the time of each settlement and determine if you were insolvent. I am lucky that I got a bankruptcy appraisal on my condo and it was 30k less than what I owe. That 30k of liabilities helped me since after a couple o settlements your liabilities drop quickly.

[inevitable]

Feel free to refer to one of my prior posts. I settled all my cards and was able to avoid bankruptcy.

http://www.bkforum.com/showthread.php?t=40583

I intend on showing the insolvency that one of the other postes mentioned through IRS form 982 using the worksheet from the 4682 booklet. Basically they look at your assets and liabilities at the time of each settlement and determine if you were insolvent. I am lucky that I got a bankruptcy appraisal on my condo and it was 30k less than what I owe. That 30k of liabilities helped me since after a couple o settlements your liabilities drop quickly.

Have you had any creditors try and sell the forgiven debt to other collection agencies, even though they settled the debt with you? I keep reading posts saying they do that, but I have yet to see factual evidence of it.

[Spyatu]

Thank you for the responses, well out of SOLE curiosity I called Citi today, immediately I was transfered to a law firm and the person explained to me that they had send some papers and that they are going to Sue me.

I know theres a LOT of material in the forum but my head is not in the correct place after that phone call, at the moment I have more questions than answers, what does this mean ? do I now have to hire a lawyer ? I don't have money for the card let alone a lawyer ? any advice?

[newbeginning]

spyatu,

others will chime in, but have you read all of the posts above? are you planning to file? the way i look at it, if you can pay $8K+, you must have money for a bk attorney or other, right?

being sued is not the end of the world, but you need to get an attorney and hopefully prepare for bk (or other options per attorney's rec).

unfortunately, a lesson that you will not forget. sorry about your troubles.

GET A LAWYER!

Good luck!

[Spyatu]

bk attorney was never on my plans, I was hoping they will work with me since I had a legitimate case because my company cut my wages with the new position, same way I resolved the first one but I guess not.

[inevitable]

I guess you don't read the 'factual' posts about people on this forum who file BK and still have JDB trying to collect it from......................................

Ok, you must have too much time on your hands to write a 7 paragraph response. I find it all very hard to believe, especially to the fact that there are hundreds if not thousands of debt settlement companies out there doing business, some reputable some not I might add, including law firms that specialize in debt settlement, yet I have yet to hear anything in printed press or local news that is warning consumers of this "phenomenon". While they might move the forgiven debt to another agency, you have your settlement papers in hand, and can tell them to shove it, send a cease and desist, and laugh all the way to the court room to have them lose in the event that they sue you. The whole notion of this occuring seems very far fetched, and I can google how to make Mountain Dew glow also, but it doesnt mean its true.

[OhioFiler]

Ok, you must have too much time on your hands to write a 7 paragraph response. I find it all very hard to believe, especially to the fact that there are hundreds if not thousands of debt settlement companies out there doing business, some reputable some not I might add, including law firms that specialize in debt settlement, yet I have yet to hear anything in printed press or local news that is warning consumers of this "phenomenon". While they might move the forgiven debt to another agency, you have your settlement papers in hand, and can tell them to shove it, send a cease and desist, and laugh all the way to the court room to have them lose in the event that they sue you. The whole notion of this occuring seems very far fetched, and I can google how to make Mountain Dew glow also, but it doesnt mean its true.

That stuff is toxic! I bet it does glow!

[inevitable]

LoL, I was at a party the other night and they tried doing it with baking soda and vinegar, it was so funny, it didnt glow at all, I asked them where did you get that idea from, and they told me they "googled" it. You can't believe everything you read these days, especially on the net.

[Spyatu]

Ok I understand Thanks, does the fact that I have a copy of the letter that was giving to me by my Human resources dept explaining my new position and the economical changes that were coming has any value ? I sent the letter 3 months before we started to fall behind then I made two more payments showing them that I wanted to resolve the issue, I was calling them every week to see how we could resolve this issue then the verbal and nasty calls started, or all of that is insignificant ?

If I go in front of a judge I'm sure he will laugh as its we have zero money to spare, I did offer to pay $100.00 a month until we can come up with a solution.

[treehugger1]

njguy, I tried the same route 2 - 2 1/2 years ago. I could get the national CC's to give me soem good "deals." On the other hand, soem credit unions would not play, nor would some local creditors. While I was paying Citi, BOA,e tc on great terms, the local folks sued my a** and got garnishments. Why? becuase they knew I made good wages and were unwilling to settle for anything less than the full amount. In the end, I said screw 'em all. Like you, I would have been (and still would be) in a 100% payback plan. Since I can live comofrotably on 75% of exempt take-home wages, I don't need to file for BK until I get to the point where I can file BK 7 (retirement.) There are many other variables in my case, but my pension and TDI's continue to grow, and no (not a single one) national creditor has filed suit; only a few local creditors who are now paid in full through garnishment.

As stated by others on this forum, you best have all your ducks in a row. In terms of settlements and passing in the remainder to JDB's etc. This happens to folks who do not pay attention.

I've also stated in other posts that their is a huge difference in formal BK under the laws, and informal BK where one let's local and state laws take precedence.

[inevitable]

BigBoy2U, I dont get it, y are you ridiculing me?

[Flamingo]

Feel free to refer to one of my prior posts. I settled all my cards and was able to avoid bankruptcy.

http://www.bkforum.com/showthread.php?t=40583

I intend on showing the insolvency that one of the other postes mentioned through IRS form 982 using the worksheet from the 4682 booklet. Basically they look at your assets and liabilities at the time of each settlement and determine if you were insolvent. I am lucky that I got a bankruptcy appraisal on my condo and it was 30k less than what I owe. That 30k of liabilities helped me since after a couple o settlements your liabilities drop quickly.

Claiming insolvency as you state above ups the chances of an audit tremendously to the point where you should expect an audit. I suggest having a tax professional do your taxes for the year in which you settled just in the event you do get audited. It will protect you.