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Author: jonsey212 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308484  
Subject: How to Negotiate a Settlement? Advice Please!!! Date: 5/23/2001 12:08 PM
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Hi,

I have 4 credit cards that I've been paying off via a credit counseling service for about a year. Recently, it looks like I may come into some money and I want to pay off these debts.

My question is: can you negotiate with creditors to accept less that the whole amount? I read somewhere you can make them take $.35 on the dollar. Is this true? Any down side? Any advice would be greatly appreciated.

Thanks,

Trish
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Author: JLizNY Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 72164 of 308484
Subject: Re: How to Negotiate a Settlement? Advice Please Date: 5/23/2001 12:14 PM
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It will show up on your credit report as "Paid by settlement" which can hurt your credit rating. I wasn't able to get an apartment because I did this and it showed up on my credit report.

JLizNY

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Author: Leviathan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 72197 of 308484
Subject: Re: How to Negotiate a Settlement? Advice Please Date: 5/23/2001 2:21 PM
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I have 4 credit cards that I've been paying off via a credit counseling service for about a year. Recently, it looks like I may come into some money and I want to pay off these debts.

My question is: can you negotiate with creditors to accept less that the whole amount? I read somewhere you can make them take $.35 on the dollar. Is this true? Any down side? Any advice would be greatly appreciated.


Trish, I hate to be the one to rain on your parade but I personally believe that if you the money to pay any of the debts in full, you should. You borrowed to money willingly and they lent it to you in good faith. Plus, to be quite honest, if you've been making regular payments on the debts they're not going to negotiate with you because they have no reason to.

Leviathan

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Author: vakoala Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 72206 of 308484
Subject: Re: How to Negotiate a Settlement? Advice Please Date: 5/23/2001 3:28 PM
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My question is: can you negotiate with creditors to accept less that the whole amount? I read somewhere you can make them take $.35 on the dollar. Is this true? Any down side? Any advice would be greatly appreciated.

Thanks,

Trish


You might want to check out the tax repercusions if you do this. I understand you get a 1099 for the money you don't pay back and have to claim it as income on your taxes.

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Author: warrl 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: 72256 of 308484
Subject: Re: How to Negotiate a Settlement? Advice Please Date: 5/23/2001 6:02 PM
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My question is: can you negotiate with creditors to accept less that the whole amount? I read somewhere you can make them take $.35 on the dollar. Is this true? Any down side? Any advice would be greatly appreciated.

No, you can't MAKE them take anything less than full value.

In some cases you can PERSUADE them that the alternative to a partial settlement is a bankruptcy where they get nothing, and then they (most of them) will take the settlement.

However, that will then show up on your credit report, and while not as bad as a bankruptcy, is rather negative. (And the profit you make is taxable.)

(Fixed-rate loans are occasionally the subject of settlements because the fixed interest rate is too low - the company would prefer to get $75,000 now on a $100,000 loan, rather than have it paid off over the next twenty years at 4% interest. These DON'T show up badly on your credit report. But the profit you make is still taxable.)

If you're in CCCS, then when you complete the program and are out of debt the negative "Debt Management" entry should come off your credit report, leaving it full of long rows of regular monthly payments. This is A Good Thing. Messing it up with settlements doesn't sound good.

On the other hand, if you take this windfall (or most of it) to CCCS, you can probably use it to pay off a few of your debts entirely, and then replan things to maybe keep a bit more of your money. I wouldn't even ask to keep more than half of the now-unnecessary payments; the more you leave in, the sooner you complete the program.

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Author: estermae Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 72266 of 308484
Subject: Re: How to Negotiate a Settlement? Advice Please Date: 5/23/2001 7:14 PM
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My question is: can you negotiate with creditors to accept less that the whole amount? I read somewhere you can make them take $.35 on the dollar. Is this true? Any down side? Any advice would be greatly appreciated.


warrl's reply was right on the money.

My only addition to warrl's is that if you *do* decide to settle with your creditors, ask your counselor for help. He/she can contact the creditors for you. Realize that not all creditors will offer settlements. It depends on their individual policy.

Ester


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