should I contact cc companies to settle.

[rapalapaul]

I was going to file chapter 7 last oct. but my work put me on ot for 2 months an now I cant do a chapter 7. I was thinking of trying to settle my CCs. A CA for discover called me a couple months ago and offered me 1500 on a 12000. I am not getting any calls from any cc I gave them my lawyers number couple months ago.

[carlsbadmike]

Months after successfully resolving credit card debts, consumers have received 1099-C "cancellation of debt" tax notices in the mail. Why? The U.S. Internal Revenue Service considers forgiven or canceled debt as income. Creditors and debt collectors who agree to accept at least $600 less than the original balance are required by law to file 1099-C forms with the IRS and to send debtors notices as well. Taxpayers must report that "income" on their federal income tax returns.

Read more: http://www.creditcards.com/credit-ca...#ixzz1ENYc28wj

[espo1357]

I was going to file chapter 7 last oct. but my work put me on ot for 2 months an now I cant do a chapter 7. I was thinking of trying to settle my CCs. A CA for discover called me a couple months ago and offered me 1500 on a 12000. I am not getting any calls from any cc I gave them my lawyers number couple months ago.

there is not enough information here.

if you have income, then save the 1500 and settle for 1000. To file BK for a small amount is silly, unless you have no job and don't want to work or whatever.

IMO, BK is a gold bullet that you get once, maybe twice in a lifetime to use, so use it wisely.

[rapalapaul]

I dont think u understand That was just one card. I have 12k on discover and they offered to settle for 1500. I have 3 more cards boa chase and citi. If I can get close to the same deal with them It would be alot better than chapter 13 even if I get a 1099. It been 12 months now since I made my last payment to them.

[frogger]

Don't make any big plans for everyone to settle. While you may get 1 or 2 to settle, overall, it's going to be a bad deal for you. If you decide to choose the settlement route, make sure that everything is in writing and signed by your lender before you consider it.

[AngelinaCatHub]

Don't make any big plans for everyone to settle. While you may get 1 or 2 to settle, overall, it's going to be a bad deal for you. If you decide to choose the settlement route, make sure that everything is in writing and signed by your lender before you consider it.

All the above posts are correct. However, to add, your credit is already 'in the tube' since you are in default so far now. You said they are no longer bothering you. Let it go for a while. If and WHEN things get worse, and you have to file bk7, and, you paid anyone, this could be preferential as well as throwing good money after bad. Put your extra money into an exempt account (IRA) and a bit of emergency money available to you and not in a bank. Save for a lawyer (just in case).

Things today are too unstable and having that job is not guarantee you will have it in a year. I hope you do, but it is prudent to prepare for the worst, and hope for the best. My opinion only. 'Hub

[lovemybugs10]

Settling can work. Is it cost effective though? I'm settling because if I were in a 13, I would pay 100% back. So the amount I settle for and the amount I could have to pay income taxes on is still far less than what I would pay in a 13.

If it isn't cost effective, file bk. If it is cost effective, contrary to what most people think creditors are settling. I am paying between 30 and 40%....some people expect them to settle at 10%, I don't see that happening very often.

Put pen to paper. Figure out how much you would pay total if you settled at 30% with everyone. Then figure out how much dmi you would have in a 13 and how much you would end up paying.

[espo1357]

If you are going to be forced into a 13 because you make too much, then it would seem to make sense to settle for 10-20 percent on the dollar, do you think?

Unless, you are totally broke, and owe so much money that you can't think straight, then going the BK route is the way to go.

Personally, I find that BK is the absolute last route to take.

Am I missing something here?

[BKParalegal]

If your debt is consolidated into 4,5,6 creditors and you have access to funds then why not settle. Try to pay 25% or less of the balance due and when they send a 1099. Use the IRS form 948 to relieve you of the tax implications.

@hub remember preferential treatment is only 90 days before filing so that hardly plays a part into the whole thing.

And screw filing chapter 13 for just unsecured creditors, I would rather use a hole punch on my eyelids and watch the movie Gigli for the rest of my life.

Good luck

[df04527]

Don't make any big plans for everyone to settle. While you may get 1 or 2 to settle, overall, it's going to be a bad deal for you. If you decide to choose the settlement route, make sure that everything is in writing and signed by your lender before you consider it.

While we are here -- and your negotiating a settlement -- negotiate they DELETE the negative from your credit report too! Be prepared for them to say they will "update" it -- don't take that bait - all they will do is update the balance to zero AND it will then stay on your credit for seven years. So try to negotiate with them to delete it. It works sometimes. Can't hurt!

[DYLAN150]

Lovemybugs10. That's me, I would be at about 100% in a chapter 13. That can't get my retirement, my house has little equity any more so I just wait and see what happens.

[lovemybugs10]

I waited it out until I had money to pay them. I did move from one state to another, so it took a bit for them to find me. I also don't care who else they call to find me.... and I never answered my phone until I was ready to make an offer.

[treehugger1]

Just to add another piece of input here. In 2006/07, I would have been in a 100% payback 13. All contributions to my personal retirements accounts would have been put on hold. Student loans would have been put on hold for five years adding another $20 - $30K of interest. I attempted to settle similar to lovemybugs. Eventually, I said screw it and simply stopped paying everyone. At the time, there was about $75K in unsecured debt, not counting student loans. I went through several small suits by local creditors and was sued three times by national credit-card folks. I opted for judgments and wage garnishment. So far, I have paid out about $7K on the $75K unsecured due to judgments and garnishments. I still have two unpaid judgments, but the creditor has not even hinted that they will act on the judgment.

Currently, I am putting money away for retirement and my student loans are being repaid at 15% garnishment of my salary (I find this fair.) The additional 10% of garnishable wages is up for grabs. Beyond that, my financial life is doing very well. I do have to occasionally communicate with a CA or a collection attorney, but that is a small price to pay when measured against what I've gained. I believe that all parties (myself, creditors, CA's, and JDB's) would have benefited from a BK 7 filing. Unfortunately, my income put me way over the threshold for the means test to qualify me for a BK 7. Once I prepare to retire, I will qualify for a Chapter 7. I will probably file just to clean up any loose ends.

Currently, I see no reason to settle with any of my unsecured creditors. They can sue me. Several of the accounts are now approaching the SOL. So far, not settling has cost me less than 10% of the entire unsecured debt owed. My credit scores took a hit, but at this time my credit score is slowly beginning to improve. I think each case is specific to each individual, so my results do not necessarily transfer to others in debt.

[lovemybugs10]

Can I just say ditto?

You really have to look at the numbers, look at the beginning middle and end of whatever goal you have in mind. I'm ok with my credit being shot for a while so that we can settle. Credit isn't important to me, it is to some people. Realistically if you want to settle, it can take a while. If you want a set plan with not much up in the air, and not have to check court records daily for anything being filed- file BK. If you can't take phone calls every 15-30 minutes for the first 6 months- file bk.

There are a lot of things to take into consideration. We almost filed- it took dave ramsey (on the phone) telling me only broke people would tell me to file bk (sorry guys ) and it made me sit back and actually look at the numbers without emotion.

[dontburnthep]

We would also be at close to 100% in a 13, with no assets and no house to protect. (We walked away from it.) We are in a no garnishment state, and are insolvent by IRS standards, protecting us from paying tax on any forgiven debt. Settling, or waiting to see what the creditors do, just makes more sense for us than 5 years in a 13. Treehugger, your situation sounds very similar to ours number wise.