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Author: believe2achieve Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308782  
Subject: Getting out of credit card debt Date: 4/28/2014 2:54 PM
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Hello fellow Fools,

I am looking for guidance on credit card debt and options available including settlement. Please let me know if you recommend someone beyond the CCC, who I am already going to see.

Thanks!
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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308248 of 308782
Subject: Re: Getting out of credit card debt Date: 4/28/2014 6:23 PM
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believe2achieve,

You wrote, I am looking for guidance on credit card debt and options available including settlement. Please let me know if you recommend someone beyond the CCC, who I am already going to see.

Appropriate guidance requires information. You haven't given us that.

Whether debt settlement is an option depends on the state your finances are in ... as well as the State you actually live in. However - not that you actually suggested it - I've NEVER seen anyone on this board recommend using the services of a debt settlement company.

CCC services are usually pretty good. But any such service will charge a fee to help you set up a budget and pay your bills. If you're already under water, that's just another obligation that makes getting out of debt harder.

If you go back through the board for old posts, you'd find that most people here recommend a do-it-yourself approach. You need to figure out where the money is going and what you actually have coming in. You need to formulate a budget that's realistic - not digging a deeper hole and you can stick with - and you need to quit using your credit cards for everything - especially impulse purchases. If you can't figure these things out for yourself, you'll likely lapse right back into the same situation once you drop CCC.

This board is a really good self-help group, but only if you're willing to share information about yourself. We won't make a budget for you; but members will gladly review any you make and make suggestions of their own. They will also point out flaws in your plans and help formulate goods ones. At times they may even be of help keeping you on-track and congratulating you when you see tangible progress. But the best thing? It's all free.

- Joel

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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308249 of 308782
Subject: Re: Getting out of credit card debt Date: 4/28/2014 8:21 PM
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I am looking for guidance on credit card debt and options available including settlement. Please let me know if you recommend someone beyond the CCC, who I am already going to see.

If you are going to a use a credit counseling service, I would strongly recommend using one that is a member of the National Foundation for Credit Counseling (NFCC website - www.nfcc.org ) Each of these member agencies must be accredited and is re-accredited every 4 years to ensure that they truly are non-profit and employ certified counselors.

If you are going to settle debts, I would strongly recommend that you DO NOT use a company that advertises itself as having being a 'debt settlement' company, but rather, settle the debt with each individual creditor yourself, after fully researching and understanding what debt settlement will do to your credit report and your ability to get credit in the future. Debt settlement companies often advertise that they can settle your debts for 'pennies on the dollar' but generally end up having to have your account written off before they can get you a deal, and even then it probably won't be as good as they advertised. A good place to start your research is www.creditinfocenter.com

AJ

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Author: danbobtx Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308250 of 308782
Subject: Re: Getting out of credit card debt Date: 4/28/2014 8:32 PM
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A few other comments -
One of my friends recently had a credit card company forgive a debt based on inability to pay. Again there is a hit to the credit score. This event also generated what the IRS considers taxable income.

If you have other debt that is not credit card, you probably want to look into your overall debt load and ability to pay. sometimes bankruptcy overs a cleaner slate than dealing with a few credit cards.

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Author: FlippoHip Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308251 of 308782
Subject: Re: Getting out of credit card debt Date: 4/29/2014 7:48 PM
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If you are willing to post your budget, or at least the amount of debt you have and who you owe what, the members here will readily help you. It's tough-love, but it is GOOD advice.

I am speaking as someone who came here with what I thought was a pretty good plan, only to have the seriously smart folks here start asking questions that made me realize that my budget still needed work.

I've made good progress in the last 5 months. Much more than I could have if I hadn't come here for advice.

For the record, the only information I provided was my revolving credit debt and how much I could afford to put toward it each month. You don't have to put a whole lot of personal information.

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Author: NoIDAtAll Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308252 of 308782
Subject: Re: Getting out of credit card debt Date: 4/29/2014 11:07 PM
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If you are going to settle debts, I would strongly recommend that you DO NOT use a company that advertises itself as having being a 'debt settlement' company, but rather, settle the debt with each individual creditor yourself, after fully researching and understanding what debt settlement will do to your credit report and your ability to get credit in the future. Debt settlement companies often advertise that they can settle your debts for 'pennies on the dollar'...

Yep, tried that - The only thing a debt settlement company managed to do for me was PO my creditors. The vast majority of the creditors were in no way reluctant to advise me that they had no qualms about filing for a judgement, rather than dealing with a debt settlement company - Generally, their feeling seemed to be, "If you're paying a debt settlement company to negotiate for you, you can afford to pay more toward what you owe us." It wasn't until I retained an attorney to file a Chapter 13 Bankruptcy that they started offering deep cuts, Chase in particular, but I didn't/don't think that I could settle with them and not the other creditors, w/o prejudicing my bankruptcy filing, and some still weren't willing to negotiate nearly as much as Chase was - Some were operating under a bankruptcy filing of their own - Though I don't know for a fact, I suspect that the terms of their corporate bankruptcy may have placed limits on their negotiations.

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308253 of 308782
Subject: Re: Getting out of credit card debt Date: 4/30/2014 4:20 AM
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NoIDAtAll,

aj485 wrote, If you are going to settle debts, I would strongly recommend that you DO NOT use a company that advertises itself as having being a 'debt settlement' company, but rather, settle the debt with each individual creditor yourself, after fully researching and understanding what debt settlement will do to your credit report and your ability to get credit in the future. Debt settlement companies often advertise that they can settle your debts for 'pennies on the dollar'...

To which you replied, Yep, tried that - The only thing a debt settlement company managed to do for me was PO my creditors. The vast majority of the creditors were in no way reluctant to advise me that they had no qualms about filing for a judgement, rather than dealing with a debt settlement company - Generally, their feeling seemed to be, "If you're paying a debt settlement company to negotiate for you, you can afford to pay more toward what you owe us." It wasn't until I retained an attorney to file a Chapter 13 Bankruptcy that they started offering deep cuts, Chase in particular, but I didn't/don't think that I could settle with them and not the other creditors, w/o prejudicing my bankruptcy filing, and some still weren't willing to negotiate nearly as much as Chase was - Some were operating under a bankruptcy filing of their own - Though I don't know for a fact, I suspect that the terms of their corporate bankruptcy may have placed limits on their negotiations.

Right. Debt settlement is probably a viable option in dead-beat collection states like Texas and Florida where wage garnishment is not possible and even a not insignificant amount in assets can be shielded from seizure.

Even there however, a debt settlement strategy can backfire. If the creditor opts to file for a judgment - extending the effect of the collection on your credit report - the judgment can usually be renewed indefinitely in the hopes of eventually collecting from your estate. Also until the account is paid or you file bankruptcy, collection agencies can attempt to collect even after the statute of limitations expires - that just limits their ability to sue.

In (most) states that do not exempt wages from garnishment, a creditor is likely to file for a judgment asap if you stiff them on any significant sum in the hopes of being first-in-line with your employer. What's more, if the garnishment takes 25% of your net (federal limit), you're likely to no longer be able to pay a debt settlement company's fees - something that will breach the contract and often let them walk away with some or all of your cash.

And if this still sounds like a good idea, bear in mind that it doesn't take any time to stiff your creditors - it truly is something you can do yourself.

- Joel

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Author: believe2achieve Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308254 of 308782
Subject: Re: Getting out of credit card debt Date: 4/30/2014 12:57 PM
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Thank you so much everyone! I am truly glad that I found Motley Fool and this forum.

I am definitely only considering settling debts myself w/o a debt settlement company. I had some issues last year that negatively affected my employment, so I fell behind on my cards and now have a lot of them written off. I have a card with pretty much all of the card companies except Discover and the total debt is around 24k. After a year without a job and missed payments, I got a commission based sales job making around 1000/wk. I think I could put around 1000/mo toward credit cards with my current income. Please let me know your opinion on the best route to take!

Gratefully,

Corey

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Author: yeilBagheera Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308255 of 308782
Subject: Re: Getting out of credit card debt Date: 4/30/2014 1:03 PM
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Let's get specific - amount owed, interest rate, any expiration date on rate, minimum payment amount
There may be some advantage in paying off one account instead of another.

Can you squeeze out some money to pay down the debt (eat more beans, sell some stuff, take in a roommate, give up buying a latte or a ballgame ticket)?

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Author: joelcorley Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 308256 of 308782
Subject: Re: Getting out of credit card debt Date: 5/1/2014 4:49 PM
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believe2achieve,

You wrote, I am definitely only considering settling debts myself w/o a debt settlement company. I had some issues last year that negatively affected my employment, so I fell behind on my cards and now have a lot of them written off. I have a card with pretty much all of the card companies except Discover and the total debt is around 24k. After a year without a job and missed payments, I got a commission based sales job making around 1000/wk. I think I could put around 1000/mo toward credit cards with my current income. Please let me know your opinion on the best route to take!

For accounts that have already been written off (more than 180 days past due), your first step is probably to contact the original creditor, and make them an offer. Tell them the truth (or a version of the truth) in that you were un/under-employed and unable to make the payments, but that's changed now. Avoid any 3rd party collection agents until you've been shown proof that the obligation has been transferred. You want to be certain that the company you're negotiating with actually has the power to live up to any deal.

Bear in mind that creditors are more likely to agree to a single payoff number instead of terms. They have already tried terms with you, so they probably won't want to go that route again. This means you will need to save money in an account until you can pay the offered amount. Also bear in mind that once you contact the creditor with an offer for payment, you are letting them know you have those funds. If those assets are available for seizure in your state and your negotiations fail, they may file suit and obtain a writ of seizure in an effort to take the money regardless. So its important to know whether or not you are in a position of strength or weakness before you start negotiating. You don't want to negotiate from weakness if you can avoid it.

You will also want to make sure that any negotiations are put in writing and signed by a representative of the creditor before making the payment. In some cases you may need to write the contract and send it along with an offer letter. Bigger companies tend to be able to handle these types of requests. Smaller ones - especially small collection agents - may not.

If you want to try to actually REPAIR your credit, that may be possible as well ... but it will take time and money.

First, there is an expiration date on negative credit report entries. Seven (7) years from the date the account was charged off (typically 180 days past the account went into default), negative trade lines must be removed from your report. Also civil judgments are treated separately. These can effectively extend this expiration date. You need to know this when devising a strategy because if the accounts are already pretty old (especially if they are past the statute of limitations and a judgment is no longer possible) and if you still need to save money to make the payment, negotiations for removal become less important as you approach this date.

Second, there is nothing in the law that prevents a creditor from removing a negative trade line at ANY TIME. This means that you are free to negotiate for removal as part of your payment negotiations. Bear in mind that creditors will almost never agree to remove the trade line unless you at least pay the original principal balance. You might be able to get late charges and some of the punitive interest charges removed or reduced, but they'll want to recover their original capital investment. So if your credit is an important issue (for instance, you want to buy a house), you need to start negotiations prepared to pay the balance in full. You will need to get that agreement in writing - that if they receive a payment of $X,XXX by MM/DD/YYYY that they will consider the account paid-in-full and that they agree to not report this account to the credit reporting agencies and they agree to remove any related trade lines when requested.

Given that you probably don't have the funds to pay everyone off at once ... expect this to take some time.

Hope that helps,
- Joel

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