Should I look into debt settlement?

[batgirl]

This is a follow-up to my previous thread.

Background: I owe over $20k in credit card debt. I have always made the minimum payments on time. I also owe close to $50k in student loans (currently deferred). I have cut down my budget drastically and started a 2nd job, but at the rate I'm going, I don't think my situation is going to get much better anytime soon.

I managed to come up with $5k in cash over the last month or so. I won't be able to do this every month as most of that came from one-time sources of money (selling stuff, family/friends, etc). I am considering settling the debt with the credit card companies by myself. I would prefer it not to go to collections because this seems to have a bigger impact on credit score.

How badly would this affect my credit score? It's currently around 670. What other negative impacts would it have? And how likely is it that I can even get a settlement at this point, since I always pay on time and at least the minimum? What can I do to get the best deal possible? I have 2 credit cards.. do I have to make a deal with both? Do I have to let it go to collections? Should I just continue hoarding cash and pay only $1 per month for 90 days and then call? Do I threaten bankruptcy? Is it better for my credit score to settle with the credit card company directly or does it make no difference if I settle with the collection agency?

Also, one of the cards is discover, I heard they will close your account if you even mention debt settlement? Is this true?

Or please convince me why this is a terrible idea if it is.

[Gailete]

First off, stop worrying about your credit score. Until your bills are paid off and your financial life is in a better situation you won't be (or shouldn't be) trying to take out a loan or have any reason for someone to be poking into it and even if they did, there is nothing currently you can do about it.

I personally would take that $5000 and put it towards your credit card bills and then they will only be $15,000. At that point your minimum payment will be much less, but ignore that and pay the minimum you are paying now at least and see how much faster they go down each month. If you get paid weekly, pay 1/4 of each bill weekly (easy to do on line) as well and that will save you some on interest. Probably not much but over time it will save some. It will help from getting late payment fees, etc. as well.

I also recommend forgetting about trying to 'settle' these bills. You made them, you owe them. To not pay them in full is basically cheating/stealing from the businesses where you used them. Yes, it will be hard road that you will be on for awhile, but it is doable. Especially now that you have managed to collect this large amount (hopefully the money that you mentioned as coming from family was an outright gift and not a loan).

[JoeP]

I also recommend forgetting about trying to 'settle' these bills. You made them, you owe them. To not pay them in full is basically cheating/stealing from the businesses where you used them. Yes, it will be hard road that you will be on for awhile, but it is doable. Especially now that you have managed to collect this large amount (hopefully the money that you mentioned as coming from family was an outright gift and not a loan).

I agree with this. It is a hard lesson for some but look at the "vision" of what the future will look like: you will be debt free and will have accounts for all your expenses, resulting in a situation where you will never have a credit card balance carrying over into the next billing cycle.

[leaderscorp]

You need to pay all your debts batgirl so that you will not get banned from all mortgage providers. “Yes, it will be hard road that you will be on for awhile, but it is doable. Especially now that you have managed to collect this large amount (hopefully the money that you mentioned as coming from family was an outright gift and not a loan" I agree.

[Petunia 100]

Here's an article you may find helpul and informative:

http://www.creditcards.com/credit-card-news/help/8-myths-settling-credit-card-debt-6000.php

[Baby_nurse]

You said in another thread you had an outstanding $800 medical bill that had gone to the collections phase. Why don't you pay that off with some of some of that 5k you said you raised? That account in collections is going to hurt you for a lot longer than the higher credit card balances will, especially if you keep ignoring it.

[Wino]

It is obvious batgirl is a troll. On 6 May, she borrowed money from her sister to put her balance below the limit. On 7 May, she has a bill go for $800 go to collections because she cannot pay it, just like she said it might three days earlier (what a psychic!). On 8 May, she has $5000 that she acquired over the last month, but didn't have one day earlier when the bill went to collections. It doesn't add up. She's making up her story as she goes, and frankly, she's not a good storyteller.

All times are as reported on my screen, as I'm in Dubai.

From 6 May at 5:50 pm on the "Want to make a bigger dent" thread:

I am only spending cash right now and I was able to borrow some money from my sister to get my discover balance below the minimum. I just put $500 (min) towards the visa (lowest interest rate), $85 towards slate (so I can pay it all off before the 0% apr expires) and $300 towards the discover (after reducing my spending again and doing a focus group study) for the month of May.

She just spent $885 on May 6, above.

From 4 May at 1:10 am on the "Medical bills going to collections" thread:

I am not an expert on health insurance so I have no idea how true this is or how it works. But if what they are saying is true, essentially my own health insurance screwed me over and now I'm stuck with the $800 bill. My insurance company refused to unclaim it.

Any suggestions on what to do? They will eventually send it to collections I assume. If I could get this lowered to even $500 or so I could probably convince my parents to pay for it for me.

On May 7, she followed up the above with a report that the bill went to collections. I wonder why she didn't prevent that on May 6 with her sister's loan. Though she wouldn't ask her parents to help, her sister helping out is fine.

From 8 May at 12:44 am on this thread:

I managed to come up with $5k in cash over the last month or so. I won't be able to do this every month as most of that came from one-time sources of money (selling stuff, family/friends, etc).

Why not pay back your sister, stop the bill from going to collections, or catch on on your credit cards? Why not? Because it's all a pack of lies, as you can see by this timeline.

[batgirl]

You can read my update here:

http://www.savingadvice.com/forums/debt/72144-want-make-bigger-dent-cc-debt-already-pay-minimum-every-month-3.html#post356255

I don't know why anyone would troll this board. If you want to believe I'm a troll go ahead, but I've been nothing but polite and I'm here to learn from others who have obviously managed their finances better than I have.

It is obvious batgirl is a troll. On 6 May, she borrowed money from her sister to put her balance below the limit. On 7 May, she has a bill go for $800 go to collections because she cannot pay it, just like she said it might three days earlier (what a psychic!). On 8 May, she has $5000 that she acquired over the last month, but didn't have one day earlier when the bill went to collections. It doesn't add up. She's making up her story as she goes, and frankly, she's not a good storyteller.

All times are as reported on my screen, as I'm in Dubai.

From 6 May at 5:50 pm on the "Want to make a bigger dent" thread:


She just spent $885 on May 6, above.

From 4 May at 1:10 am on the "Medical bills going to collections" thread:


On May 7, she followed up the above with a report that the bill went to collections. I wonder why she didn't prevent that on May 6 with her sister's loan. Though she wouldn't ask her parents to help, her sister helping out is fine.

From 8 May at 12:44 am on this thread:


Why not pay back your sister, stop the bill from going to collections, or catch on on your credit cards? Why not? Because it's all a pack of lies, as you can see by this timeline.