I currently owe ,418 in credit card bills, which ended up being around 0 a month. I have been working with CareOne for 3 months now and I have to pay 4 a month plus they lowered my interest fees. It is estimated that I will be out of debt in 4 years & 11 months.
While Debt Management is working pretty well for me, I am wondering about Debt Settlement. I know it will hurt my credit score, but for how long? My credit score is already 565 so Im not sure it could get any worse. Has anyone done this? Has it worked for you? Are there any down sides?
Right now I am starting to believe that Debt Settlement is like giving up, Like I would have more relief if I just continued with the 4 a month for 4 years & 11 months. Is Debt Settlement the cowards way out?
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Sun, Jan 17, 2010
January 17th, 2010 at 6:16 am
Get with one of the LOCAL credit counseling groups (they are free, there is no charge) and get some real information to help you.
Go to the US Trustee Program/Dept of justice website to find approved credit counseling
http://www.usdoj.gov/ust/eo/bapcpa/ccde/cc_approved.htm
How comfortable are you that "CareOne" is actually paying on your debt? I hope you checked and rechecked them before you started the program, there are thousands of "debt management" scams out there that just take your money and leave you with the debt! (Care One is probably fine but how much are their fees?)
Debt Settlement is sometimes worthwhile but it too is a bad deal if you have any ability to work with your card companies. The amount of debt that they reduce, in order to settle, will be considered income and you will owe income tax on that difference!
Read this from Yahoo.
http://finance.yahoo.com/banking-budgeting/article/107996/how-bad-are-your-credit-card-mistakes?mod=bb-creditcards
January 17th, 2010 at 6:16 am
Settling your debt with a creditor is the wise way to go. You can keep making your payments for the next 4 years or be out of debt in 12 to 18 months by saving up for your settlement and the creditors will settle when they realize you are serious and not intimidated by them.
There is a company called Asset Protector Group. They work with you and help you by educating you as you make plans to settle. Think of this-No more harassing phone calls, No more annoying demand letters, and the stress relieving knowledge that you will be free in a much shorter time. There are links on a yahoo group called FreedomFromUnsecuredDebt that give you a greater understanding of how to do this. It is worth your time and money to check it out. After you are out from under your debt, follow the advice of Larry Burkett and stay out of debt.
Hope this helps.
Rob
January 17th, 2010 at 6:16 am
Hello Jess;
Although debt settlement is often advertised as a debt solution for just about anyone who is facing debt problems, this is simply not the case. Debt settlement is a "niche" solution and is only suitable for people facing financial hardship (divorce, job loss, extended illness etc) and thus facing bankruptcy.
Another thing you should realize about debt settlement is that your creditors will not negotiate a settlement with you unless they fear that you are going to declare bankruptcy, in which case they may end up with nothing. In order to convince them of this you would have to stop making payments on your debts and let your credit score get even worse.
If you do manage to settle your debts, your credit report will list the word "settled" beside these accounts for the next 7 to 10 years. Any future creditors will know that these debts were not paid back in full.
Finally, debt settlement can be expensive if you hire a company to negotiate on your behalf. The typical fee is 15% of you debts (about $1,500 in your case) payable up front.
My advice to you is that if you can pay off your debts in full, which it appears that you are accomplishing at present, then do it. You will be much better off in the long run. 4 years and 11 months may seem like an eternity, but your persistence will pay off for you in the future.
In order to shorten that payback period I suggest that you prepare a personal budget which is a great way to free up more money each month in order to apply towards your debts. By learning how to budget, you will not only get out of debt sooner, but you will keep yourself out of debt in the future and start saving for the important things in your life like retirement etc.
Good Luck Jess.
Keep plugging away at that debt.