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Subject:  Re: Getting out of credit card debt Date:  5/1/2014  4:49 PM
Author:  joelcorley Number:  308256 of 312721


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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