Can I settle a credit card with 10k in debt?

[Titan]

I keep hearing ads about how you have a legal right to settle a credit card with 10k or more in debt. I'm curious to know what this is, and are just a bunch of debt reduction companies looking for suckers.

I have one good friend who divorced his wife and after she hadn't been paying the cc for months when he thought she was, he was able to get a settlement, like 15k in debt down to 6 payments of 500 bucks. This was with BoA. Granted, once my friend found out, he worked with them, he himself was a debt collector at the time and was a nice guy so he pulled it off, just talking to them.

I am not behind on my bills, but I had over a year off unemployed where I needed the CCs as a fall back position. Before then I used to never carry a balance. I have about 20k in debt now, less than half a year's income. Since the start of the year I came up with a plan to get out of debt in 2 years, so I'm not quite halfway there yet, and I'm a bit behind. I consolidated some cards to a personal loan that I have been aggressively paying now to get ahead on the interest. I am on schedule on all my payments, occasionally I miss one by a day and am late, but I make them.

I still have 1 BoA card (used to be a small web bank, but BoA bought them a while ago), that is just above 10k. I am wondering if I can settle it. And what I have to do to do it.

I understand it is a blemish on the credit report, but I would be much better of without the interest that I have been paying on a 10k balance. My rates are decent, about 12%. But I just can't seem to knock this down, the interest keeps piling up and random bills keep popping up like fixing the car, and medical stuff.

I don't care if you think I'm scum or whatever for not wanting to pay my debts in full. Let's not get into personal judgements. At this point I am just exploring options. In these uncertain times anyone could lose their job tomorrow then hey then bankruptcy looks kinda fun. If you're a self-righteous naysayer, don't post in my thread. I don't want to turn this into a debate about banks and predatory lending practices. I just want information.

I just keep hearing these ads everywhere. What's the deal?

 

[Ausm]

From what I read any time you use a debt consolidation company or try "settling" a debt with a CC company it does severe damage to your credit rating.

 

[JD50]

Max out your credit card, start a car company or a financial company, then just ask for a bailout from the government. You should be fine.

 

[speg]

Can you settle 10K in debt? Sure, just write a cheque for 10K!

 

[Lamont Burns]

If you haven't already declared bankruptcy in your life, just go gangbusters and then say oopsy, no cash.

 

[rudder]

the debt relief companies simply contact the credit card companies and negotiate better terms and or a settlement for pennies on the dollar. You in turn pay the debt relief company the money. And as far as credit score is concerned it is nearly as bad as having a bankruptcy on your credit.

Best thing to do is call the CC company yourself and try to negotiate terms. If you are behind on payments you can offer a settlement. If they agree, get it in writing. Otherwise you have to work your ass off getting another job to pay down the debt.

Occassionally listen to Dave Ramsey and this is a common theme.

 

[mugs]

Lulz

 

[Titan]

the debt relief companies simply contact the credit card companies and negotiate better terms and or a settlement for pennies on the dollar. You in turn pay the debt relief company the money. And as far as credit score is concerned it is nearly as bad as having a bankruptcy on your credit.

Best thing to do is call the CC company yourself and try to negotiate terms. If you are behind on payments you can offer a settlement. If they agree, get it in writing. Otherwise you have to work your ass off getting another job to pay down the debt.

Occassionally listen to Dave Ramsey and this is a common theme.

Thanks for a real post. My question is does my account have to be delinquent before I can negotiate, or do I call up their collections dept while I'm in good standing and make up some BS that my job in contract and ending soon, result in inability to pay soon? I know with my friend, this was 3 years ago, he was 6 months with no payments so they just pushed a settlement.

I keep hearing ads that say "if you have more than 10k in cc debt, you have a legal right to settle." what does this mean? What law?

Oh and I am just exploring options here and I may take the 2nd job route. If I learn to freelance, which is a real option for me, my income could easily double. I may stat another thread here soon, learning how to be a freelance programmer.

 

[Canun]

I went through CC, and your rating takes a hit while you are in the program. Once I paid off the last card though, my rating shot up. Maybe I was lucky.

 

[SunnyD]

IF you attempt to do debt consolidation or settlement, you're essentially making a financial gain in terms of tax purposes. You will be liable for paying income taxes on the the difference between your settlement amount and the original amount owed.

Second, a settlement is pretty much just about as bad as not paying the debt. It shows up on your credit as a satisfied debt, but it also shows that you did not meet your debt obligations because you're not paying the full amount due. The CC company is taking a writeoff because of it.

Sure, it's good to not be paying out the ass every month too - it can save your house or whatnot. But if you're worried more about your credit score, settling is up there in the "worst things you can do" category.

 

[PokerGuy]

Whenever I hear those stupid commercials on the radio it just makes me cringe. "you have a legal right to settle your debt", and other language that's designed to pull in suckers.

SunnyD is pretty much right on. Your best bet it to contact the credit card company directly, and ask them to lower your interest rate. Some will, some won't. You can also try to find another credit card where you can migrate the debt to for a (temporary) lower rate.

No bank will "settle" for anything less than the full amount if you are current on your payments. Once you fall behind, they might negotiate a settlement for less than the full amount, but doing it causes you to have to pay tax on the difference (you'll get a 1099), and it's the equivalent of dropping a bomb on your credit reports.....

 

[nick1985]

+1 for picking up a second job and paying it down

 

[Josh]

Thanks for a real post. My question is does my account have to be delinquent before I can negotiate, or do I call up their collections dept while I'm in good standing and make up some BS that my job in contract and ending soon, result in inability to pay soon? I know with my friend, this was 3 years ago, he was 6 months with no payments so they just pushed a settlement.

I keep hearing ads that say "if you have more than 10k in cc debt, you have a legal right to settle." what does this mean? What law?

Oh and I am just exploring options here and I may take the 2nd job route. If I learn to freelance, which is a real option for me, my income could easily double. I may stat another thread here soon, learning how to be a freelance programmer.

Call the CC company and tell them you are going to be experiencing financial hardship and see if they are willing to reduce the monthly payment and lower the interest rate. What's the worst that can happen? They say no and then you get behind on your payments and then you call them again and they say yes?

Good luck.

 

[ViviTheMage]

Just pay it off, it's a LOT less hassle honestly. Take some credit counseling classes.

 

[PokerGuy]

I keep hearing ads that say "if you have more than 10k in cc debt, you have a legal right to settle." what does this mean? What law?

It means "we're trying to catch a sucker by making it sound like you have some sort of legal loophole right that you're not aware of". Anyone has the "right" to settle any debt with anyone for any amount, provided both parties agree. If you owe me $50, I can agree to take $25 and call it "even", and voila, we've "settled". The $10,000 figure is just thrown in to make it sound more legit -- it's complete crap.

 

[kalrith]

Be careful about going with any kind of debt-relief company. A lot of these will just take lots of money from you, not even put it toward your debt, and then disappear.

 

[dartworth]

http://www.creditboards.com/forums/

 

[Double Trouble]

Debt relief, debt settlement, credit repair, etc etc etc can all be summarized as: SCAM.

They're popping up left and right to take advantage of the bad economy and people in tough economic times.

 

[richardycc]

each CC has their own hardship and settlement programs, but in order to even get on these, you have to be late first, the best deal is 0% interest for 5yrs plus some type of interest reversal program. Dont settle if you don't want to screw up your credit report. and yes you have to pay tax on the amount they forgive. If you do have to settle, go for 15% of the balance in 6 installments.

oh yeah and you can do this all on your own, you dont need a company to help you with it.