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High credit card debt. Is the credit settlement companies the way to go? or is settling with the actual co.?
1 Comment · Posted by sanbank in Credit Card Debt Settlement
Is the credit settlement companies the way to go? or is settling with the actual company?
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Credit Settlement · Settlement Companies
bdancer222 · July 14, 2010 at 11:45 pm
Debt settlement companies will take your money and trash your credit. Most credit card companies refuse to play with these debt settlement companies and immediately sue you.
If your credit card accounts are current, you probably won’t have a lot of luck negotiating settlement on your own, unless you have some permanent change of finances, like medical disability. Even if you do get them to settle for less than the full balance, the account will show on your credit report as a charge off/settled — a negative. You will also receive a 1099 for the forgiven portion which will have to be included on your income taxes.
However, if you have already defaulted on these accounts and they have been sent to collections, you can probably settle for half or less — lump sum gets the best deals, payment plans have to be very short. Get the settlement agreement in writing and don’t give the collector direct access to your bank account.
If these are current accounts, you might consider credit counseling. Check for a local NFCC member: http://www.nfcc.org/. These are legit, non-profit companies that offer debt management programs for a nominal fee. They don’t negotiate settlement. They negotiate lower interest and payments so you can pay off the debt.
While in the program, it is noted on your credit file. However, upon completion of the program, the notation is removed and you will have decent credit.