Any help would be appreciated.

**jpg7n16** · 07-05-2010, 05:48 PM

I think your truck was actually your largest problem. I hope it sells - and I hope your new car is nowhere near the price of that truck. Get a $5k-10k car.

That'll solve the major issues.

Since you've gone so long without paying, you can likely save up cash - then call them and ask them if they will settle on the debts for like 50% of whatever they say you owe at that time (will likely be jacked up high mainly due to late fees and some from interest)

Minor issue: your phone payment seems high

**disneysteve** · 07-05-2010, 06:15 PM

Originally posted by allout06 View Post

Will they set up a settlement and a low monthly payment plan with me and when i get a lump some of cash ill just send it to them?

I believe the way credit card settlement works is that you call and negotiate a settlement amount and then pay it as a lump sum so don't bother negotiating until you have the cash on hand to pay whatever amount is agreed upon. Also, don't send a penny until they send you the settlement agreement in writing. You can probably settle for 50 cents on the dollar or less.

All of that said, I think a better question is why can't you pay these debts now that you are working again? Are you earning 50K again? If so and you only owe $5,500 plus interest, you shouldn't need to settle those debts. You should be able to pay them. Once you sell the truck and get rid of the $400/month payment, you'll be able to send that money to the credit cards and have them paid off pretty quickly.

**Joan.of.the.Arch** · 07-05-2010, 06:23 PM

I'd be surprised if you get any of the creditors to settle with you. Nah, I do not have any real knowledge of how that industry bargains, but your debts are relatively low and really, it looks to me as if you should be able to knock them out. Even if you get no overtime but continue to make $2100 per month, the spending you report leaves you with $1495 left over at the end of every month.

$5500 debt divided by $1494 extra money to put down on the debt gives you only 3 and a half months to save up to pay them off.

**allout06** · 07-06-2010, 06:11 AM

Thanks for the replies and help. I owe $6400 on the truck, and I bought it for 10800, @ 15.75% interest cuz it was my first loan on my own. actually first loan ever. The car I'm gettin runs great it just looks like hell, I figured I'd let go my nice vehicle so I can save up that $415/month and pay em off. It just feels like it's gonna take me forever. And u have to remember I was on unemployment up until the middle of may this year so I'm just now starting to some of my things caught up. my cell phone has always been 85. I have the iPhone and I have an eCheckbook and my banking infomation. It's basically my personal finance helper. but any advice on saving up money pretty fast....?

**disneysteve** · 07-06-2010, 07:57 AM

Originally posted by allout06 View Post

my cell phone has always been 85. I have the iPhone

How much time is left on your iPhone contract? You certainly don't need a high-end smartphone until you have your debt paid off and your finances in better shape. If your contract ends soon, let it run out and then deactivate the iPhone and switch to a cheap (free after rebate) phone with basic service. If your contract doesn't end soon, run the numbers and see if paying the early termination fee now would save you more in the long run. I love my iPhone but it isn't cheap.

**skydivingchic** · 07-06-2010, 12:14 PM

Well, the first thing you need to do is find out what your outstanding balances are on the CCs. Right now you don't have enough information to figure out what needs to be done. Find out if any will take payments or if they just want to settle lump sum. Once you have done that, you can put together a plan. Others have mentioned that the truck is a problem, and you've said you are working on selling it, so that is good. Get it sold, get a beater you can pay cash for, and take another look at your budget.

From the budget you posted, you have ~$600 left over each month without any overtime. Even if the CC balances have doubled and you have to pay the full amount, you can pay these off within ~2 years, depending on interest rates, etc. So the situation is not that bad.

There are no "secrets" to saving money fast. It is as unglamorous as cutting expenses and/or making more money. So, do you have anything you can sell - old clothes, sports equipment, CDs, etc? Can you take a second job delivering pizzas or working retail or something? On the cutting expenses side, getting a more fuel efficient vehicle should help and DS already mentioned downgrading the iPhone.

Do you have direct deposit at work? If so, have them split the direct deposit between your checking account and a savings account. Have $600/month put into the savings account so that you never see the money. If you can't do that, set up an automatic transfer at your bank so that the day after you paycheck is deposited, they transfer the money into the savings account. Consider opening an online savings account for this purpose as some place like ING, Emigrant, etc so that the money is separate and a bit harder to get to (it takes a few days for transfers to process). This should make you think twice before using the money for other stuff.

As has already been mentioned get any settlement agreement in writing before you pay it. Don't give the CC direct access to your account - send them a cashier's check. There have been instances where the companies took more money than was agreed, so you don't want to give them your account numbers.

**disneysteve** · 07-06-2010, 12:22 PM

Originally posted by skydivingchic View Post

As has already been mentioned get any settlement agreement in writing before you pay it. Don't give the CC direct access to your account - send them a cashier's check. There have been instances where the companies took more money than was agreed, so you don't want to give them your account numbers.

Very good advice. Never give them your account information and do not send payment by personal check since that has your account info on it. Also, once you do settle, save all of the documentation forever. Save the written settlement agreement. Save your copy of the money order. Save any and all documentation so that they don't come back years later saying you never paid. I have heard several callers on Dave Ramsey who were being harassed by collection agencies for debts they had settled years (10 or more years) earlier. You never know when you might need to prove that you paid the debts.

**Joan.of.the.Arch** · 07-06-2010, 12:52 PM

Thanks, skydivingchic for setting right my most atrocious math!

**allout06** · 07-07-2010, 07:21 AM

Well good news, I have a guy comin to look at my truck today, he sounds pretty interest and is coming from like an hour away or so hopefully he buys it. But anyway. How do I approach the CC company with a settle ment. Say on my 2000 limit one, just tell em I can give em like $1300 today if we can settle it or what. I kno they will say no at first but what else can I say or should I asked for a manager directly.

**disneysteve** · 07-07-2010, 07:41 AM

Originally posted by allout06 View Post

How do I approach the CC company with a settlement.

I would ask you again, why can't you pay your debts? You have a job now. Why not start getting current on your debts rather than defaulting on them?

**Debt Relief** · 07-07-2010, 09:30 AM

The first thing that I would recommend doing is pull your own credit report. You can get a free credit report from each of the 3 bureaus once every 12 months. This should give you a feel for how bad your credit situation has become. Find the 3 credit card accounts on your report and try to determine their disposition and outstanding balances.

Next you can contact all 3 credit card companies, and find out a few things. It's ok to call your credit card companies, however I would avoid ever calling a collection agency to inquire about a debt.

The main things you need to know:

1) Has the debt been turned over to a collection agency?
2) If it has been turned over to a collection agency then what is the contact info for the agency (NOTE: I would NOT call them, just document it so when they eventually call you'll know which debt it is about)
3) If it has NOT been sent to collection then inquire as to whether they are willing to work out some payment plan with you (best case) or will negotiate your debt amount down.

Do NOT agree to anything. You're simply on a fact finding mission. If the original creditor has NOT turned the account over to collections then I would recommend working out some kind of payment plan so that you can pay back the account in return for them eventually marking the debt "paid as agreed" on your report. You'll still be dinged for all the previous lates, but you won't be dinged for the final account status.

Most credit card companies used to have policies against negotiating with debtors. They would wait till it went to collection and let the collection agency negotiate. But because of the economic crisis of late, many banks are starting to negotiate directly with debtors, often for as little as 35-50% of the total debt.

If you decide to go the debt negotiation route, then if possible negotiate with the credit card company directly (IF it has not gone to collection). At this point there is only ONE account record for the debt on your credit report. You goal should be to get out with as low a lump sum as possible and a favorable (or somewhat favorable) account status. Get it in writing what they will set the account status to before you sign or agree to any settlement.

If possible get them to agree to flag the account as "Paid as agreed" as part of the settlement. This is ideal. However, most will not do that, but will likely flag the account "Settled" instead.

If your account has been sent to collection then you likely have two account records on your credit report. One will be the original credit card account record and it likely has an account status of "charged off". The other will be an account record for the collection agency. At this point you are going to be dealing with a collection agency.

The good thing about dealing with collection agencies is that they will usually settle for much less than the original creditor would. The bad thing is that you now have TWO account records on your report to deal with. As part of settling with the collection agency, make them REMOVE their account record from your credit reports at all three bureaus as part of the settlement... and GET IT IN WRITING as part of the settlement agreement. This will at least get rid of one of the account records.

Once settlement has been made, if you do not plan to dispute the original creditor account record at some time in the future to attempt to get it removed then notify the original creditor that you have settled. They are required by the FCRA to change the status to reflect it's current status... i.e. they should change it from "charged off" to "settled".

NOTE: Any portion of the debt that you negotiate down and do not pay is going to be taxable during that year as if it were income. So be aware there are tax ramification to negotiating your debt.

**Slandgie** · 07-07-2010, 06:01 PM

Thanks Debt Relief. That is some great advice. Especially in regards to not paying the portion of debt that is negotiated down. I was also told awhile back that that is treated as taxable income. For this reason, I intend to pay off my debts in full.

Any help would be appreciated.