Question regarding direct debt settlement to avoid BK.

[bluflax]

xxxxx

[SinkingFast]

Eventually, Blu, after missing payments for a while, your CC's will make offers to settle with you.

Letters we've gotten vary from 60% to 80% of what we owe. Lump sum of course. And they usually give you 30 days from date of the offer to pony up.

But my experience was, the CC's wouldn't budge when we asked prior to their offers. They wanted all back payments due AND payment for the full balance owed.

Only after missing 5-6 payments, did the Settlement Offers start coming in.

[bluflax]

xxxxx

[SinkingFast]

Our attny actually told us to WAIT.

The paralegal said we're not in any danger of being sued. We were in Foreclosure but didn't live in the house. So no worries of being on the street.

Take your time. Research and learn about BK. Watch what you do so you don't make a mistake that could cause problems with a BK if you do wind up filing.

Our first CC came after us with a letter from a Collections Agency after 5 months of missed payments. Gave us 30 days to respond. We didn't hear anything and I worried. The 30 days was up 6 weeks ago. Last week, they sent another letter. Same offer. Same 30 days.

So you'll have some time to work on things and collect up some funds.

The only thing you have to worry about is all the lates that will be showing on your Credit. But those won't be as bad as a BK, overall.

[no_it_all]

Just a quick FYI...most everybody on this forum has been <exactly> where you are. Trying to pay bills, not trying to skip out on a bill but trying to do the right thing. Honest people. But, in the end, after liquidating most everything they have, they eventually go BK...Not saying that is what will happen, but being really honest with yourself is a real good idea right now. Good luck..denial isn't just a river in Egypt...

[bluflax]

xxxxx

[rrockinggramma]

Also another aspect of settling the debt to consider is that the "forgiven" amount is taxable by the IRS. If the cc company sends you a 1099 then you must report the forgiven amount as "income" on your taxes. Not all cc companies will do this but some will.

[SinkingFast]

Just a quick FYI...most everybody on this forum has been <exactly> where you are. Trying to pay bills, not trying to skip out on a bill but trying to do the right thing. Honest people. But, in the end, after liquidating most everything they have, they eventually go BK...Not saying that is what will happen, but being really honest with yourself is a real good idea right now. Good luck..denial isn't just a river in Egypt...

That is sooo true, NIA.

Every attny we consulted with told us about all the money and things they coulda saved us IF we'd only come and seen them a year sooner.

[SinkingFast]

Sinking,

I just got off the phone with a debt settlement company that was trying to get me to use their services. I told her of my plan to settle my debt myself. She stated that the offers the CC co's send to you get yanked away 9 out of 10 times when you agree to settle. She said it is because if you agree to settle, the CC co. then wants to know why you haven't paid in so long if you can pay 8 months later when they send a settlement offer. Do you think she was telling the truth or just trying to get me to use her services?

I don't know if it's true or not Blu. We've had offers from a couple of CC's, but settling with them won't fix our situation so why bother.

Did you chat with a DOJ approved Credit Counselor??

There's a list at the DOJ website:

http://www.usdoj.gov/ust/

Check out the link to Credit Counseling and Debtor Education. There's a list of DOJ approved CCA's. Maybe see what one of them has to say on the subject.

No one else that's posted here has successfully completed a Debt Management Plan with a reputable company. Most everyone that's tried it has gone with a rip-off, con artist company that's just cost them time and money.

Rrocking did make a good point. Forgiven debt can become tax liable income. Depends on if the CC issues a 1099 on the deficiency balance or not.