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2) I have decided to write letters to my creditors (credit card companies) offering to pay 15%-20% on the balance. This amount was suggested in an article I read recently about dealing with debt collectors. I'll be writing those letters today.

I would forget that possibility, unless and until you first retain a bankruptcy attorney. You might get some knocked off, but nowhere near 80-85%. Citibank offered me around that amount, but only after I retained a bankruptcy attorney. I will end up repaying around 14%, but only after filing a Chapter 13, if I can complete the plan. The only advantage to them in offering such a low repayment is the fact that they can take a tax write-off and pass it on to me, whereas they can't if a bankruptcy is filed.

Also, stay way far away from debt settlement companies. In my experience, they don't help, in the least, only add to your debt load, lengthen the time frame and diminish the amounts that you can afford to repay. Creditors will tend to listen to you more readily than a debt settlement company that you are paying, when you can't afford to repay the debt that you owe them.

Barring your filing bankruptcy or negotiating a documented settlement, creditors can pursue the amount that you owe them years from now, and restart pursuit from scratch. Plus, if you miss a single timely payment on either a settlement or a Chapter 13 plan. the original debt can be reinstated.
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