Debt settlement

A credit counselor discusses what debt settlement is and how it can help or hurt you.

Category:

Education

Tags:

• debt
• debt settlement
• debt help
• credit cards
• credit card
• crunch crunch

[makeiteasyable]

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[roxcyn]

Recommendation, volume level is TERRIBLE in the video. I have it all the way up (100%) and it still sounds like you're whispering.

[forenough]

so, what exacty is debt?

[TYX91101]

I paid 800 a month for 42 months to a settlement bureau to settle $45000 in card debt. That's still a lot of money but only a fraction of what I would have paid had interest charges not been cut off during that period. I'd have been paying for the rest of my life and still had a balance. Now, two years after all debts were settled at reduced levels, I'm getting plenty of offers for new cards and my credit score is 670, not perfect but still good enough to get a car loan.

[wahahn]

I say screw them all. They took billions of dollars out of our pockets already in the ILLEGAL, UNCONSTITUTIONAL GOVERNMENT BAIL OUT - It you're in debt that you can't pay....FILE FOR BANKRUPTCY. It's not as bad as you think it is. Talk to a lawyer. If you can't afford the lawyer, call your county's Bar Association, they will be able to point you in the right direction to get legal help.

[debtsettlementstory]

This is a good start to the debt settlement conversation.

There are a lot of unscrupulous companies out there.

I used a company called Consumer Recovery Network that charged me $1150 to settle $130,000 of unsecured debt. It took 6 months and my final settlement amount was $40,000 or 28 cents on the dollar. Their fee of $1150 was minuscule compared to other companies whose fees were on average $10,000..or more!

I am blogging about it at debtsettlementstory (dot) com

[ceelos1020]

ok im new on this topic. so if you agree on a settlement and pay it. does that eliminate the debt you owe your creditor?

[CreditCardExpert]

Heidi, you're again presenting misinformation. The debt DOES go away. You no longer owe that debt.

Yes, the portion of the debt that has been forgiven may become income, which is taxable. But paying taxes on a fraction of the debt that has turned into income is not the same thing as owing a debt collector. Sheesh.

[HurricaneHeidi]

It is true. The agreement to accept service of process in case of inability to make payments on the settled account is almost always included in the fine print. Debtors' blogs are full of people who only found that out after they thought they had settled their debt. If you miss a payment, you are immediately being sued.

After settling, the credit card company issues you a 1099MISC reporting the difference between what you admit you originally owed and the settlement amount - as INCOME.

[CreditCardExpert]

That's just not true. Settling a debt makes it go away. If the creditor agrees to settle, the debt is gone. If you agree to let the creditor sue to collect a debt, then you haven't signed a debt settlement, you've signed something else, something very very stupid.