My husband and I dont have bad debt like i have heard people talk of we have close to 4,000.00 dollars in debt ( i owe 2,000.00 and he owes 2,000.00) in credit cards. we are recently married and we want to eventually buy a home but first we want to pay off all our debt and late bills. if we call the credit card company and say “hey we will pay 1,800.00 right now.” and then what do i do? i am not good at this so can someone please help me like what step by step do i have to do to reduce our debt. thank you guys.
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Sat, Feb 13, 2010
February 13th, 2010 at 9:02 am
Credit card companies only settle on accounts that are past due…and even if they did settle on your current account, you’d be shooting yourself in the foot as any settlement is a big negative on your credit report….
Count yourself lucky if this is all the debt you have. Check out any book from Suze Orman at the library for advise in dealing with the debt and setting a goal to eliminate it.
February 13th, 2010 at 9:02 am
They will laugh at you, metaphorically speaking. They only accept offers like this when the account is well in default and then you would get a 1099 and owe taxes on the discount amount. You would also ruin your credit for several years and not be able to get a mortgage. What you need to do is pay off the debt, starting with the highest interest debt.
February 13th, 2010 at 9:02 am
1. cut them a check for 1800 and send it in to them.
2. you have 2200 left… try to transfer that to a credit card with 0% interest for the next year (credit card companies offer this to people to get them to come aboard).
3. watch your spending over the next year, and consciously cut costs of things you don’t need. only buy what you need to survive. Think… survival… not life and fun.
4. get used to spending less. that is how you can eliminated debt and save.
5. to do all of this quicker, you can pick up a second job, and use that money to pay off everything quicker.
6. about the house… wait until you have about 30% of the house cost saved up before you buy one. This will give you a good enough buffer or down payment. – you never want to get into debt again.
February 13th, 2010 at 9:02 am
Forget about trying to settle that credit card debt for less. The companies are not going to accept such an offer, but if they did, it would show as a charge off/settled on your credit report — a negative.
Instead set up a strict budget. Get rid of all the fluff and concentrate on paying off the credit cards. Throw every penny you can squeeze out of your budget at the highest rate card, while paying minimum payments on the rest. When the highest rate card is paid off, move to the next till they are all paid in full.
If you really work at it, you can have that $4K paid off in less than 9 months. Then only charge what you can affort to pay in full.
February 13th, 2010 at 9:02 am
Catdad is absolutely correct…but let me add this note of hope
Consider this……the fact that you will no longer be paying approximately $100 per, considering on your interest rate, a $200 discount is nothing compared to what you will save by paying the $4K off asap and no longer paying interest at cc rates.
The discount you ask about is chump change compared to what you will save in interest.
$200 is nothing… believe me, you will save thousands by paying that all off asap and the $200 discount would not have put a dent in THAT kind of noticable savings.
It is like asking, If I call the dump truck driver and ask him to slow down from 60mph to 55 mph just before he runs me over will he slow down?
Just pay it off and don’t get run over at all instead of wondering if you should ask him if he will veer off 7 feet away instead of 5 feet away.
February 13th, 2010 at 9:02 am
Why on earth should they settle with you? You charged the $4,000 so you owe the $4,000. I don’t understand why this county has such a hard time grasping this concept. Cut your lifestyle down for a while and save save save! Don’t be a deadbeat. Check out some of Dave Ramsey’s books or listen to his show online.
http://radiotime.com/program/p_20156/The_Dave_Ramsey_Show.aspx