Debt settlement - is it worth it?

[Hawkeye-X]

We are about $35k in debt, and we chose what we believe is a reputable debt settlement company. It's been reviewed by the BBB, and has certifiations to the wazoo.

They offered to knock off our debt (from $35k to $15k) and just pay $5k additional (their fee, at 15%), and I pay that in monthly installments for 3 years - $550.00. Their contract seem to be good and they use a third party trust account to help pay down the debts.

I have not yet signed on with them, but would appreciate a quick review of the contract to see if it's legit. I'm 95% sure they are legit, they have been in business for 12 years, and has a HQ right here in Colorado. When Colorado changed its law to protect from debt collectors, a lot of them left Colorado and this is one that has stayed and changed its policies. It's a fair one too.

[NJCher]

1. ask for some customer referrals

Personally, what I know about debt settlement is that what you're describing is near impossible, but maybe I'm not current.

If you pm me I can give you a little extra info.


Cher

[Lone_Voice]

2. maybe

So essentially they are taking your debt down to 20k? From 35k, to 15k, then adding their fee of 5k?

Do you have to pay the 5k up front? Is there a loan schedule, is it amortized like a mortgage?

From my rough calculations they are not charging you interest so it would seem to be a good deal. My advice would be to spend an additional 300-500 for an attorney to review their documents.

[ET Awful]

3. I wouldn't recommend it personally . . .

First - unless you're already way behind on your bills, your creditors won't negotiate a settlement.

Second - While you're paying the payment to the settlement company, the creditors can still pursue you via collections and court action until they are paid by the settlement company.

Third - Your payments to the settlement company will likely go to them first, with no payments being made to creditors until their fee is paid in full.

Fourth - Any reduction/forgiveness of debt is taxable income (that would mean $20k that you would have to pay income tax on assuming all of the creditors cooperate and agree to settle which is by no means guaranteed).

There are a lot of problems connected with these settlement companies, I'd be very, very wary of signing anything.

[Lost4words]

4. good luck my friend, let me know how it goes, from your old buddy 8643!

I have pretty much told my creditors that when I get a job I will start paying them again. Even though they have offered 70% off in some cases. Its frustrating because I have no income so I cant even take advantage of these offers. I am sure they have already written off my debt but still hound me on a daily basis. I have a problem with being a profit source to anybody re my debts, Even bankruptcy would cost me and not discharge my debt.

Honestly you will pay 20K for 35K debt, that seems high to me, I guess its based on your current financial situation, but when I get offers of 70% off,..... Have you tried negotiating with the creditors directly?

I'm 56 and really dont care if I ever have credit again which is good as my credit score has a decimal point followed by several zeros I sure. My creditors also know I havent purchased anything other than food and gas for over 4 years, we have no new cars and a mortgage that we manage to make each month, we owe more than we could sell for due to drooping housing prices. So if lawyers show up, I hope I am in a good mood which is the exception these days.

I am not a profit center any more, I am a Human Being. :hi:

[Lost4words]

5. when the banks got their bailout, I divided my debt to them into what they received

and they can deduct my debt from their stimulus as far as I am concerned.

[melm00se]

6. a few questions:

1) are you currently delinquent? if so how far and on how much? when was the last time you made a payment on any of these bills?

2) what you are delinquent on, is it a secured debt or unsecured debt?

3) how is your current credit? good, bad, indifferent?

4) have you approached your creditors independently?

the reason I ask:

- lenders are extremely reluctant to negotiate on current bills.
- lenders don't like to negotiate on secured debt (they will if the collateral is worth significantly less than the loan balance)
- if you have decent or better credit think carefully about doing this as your credit will take a hit. While there are people who don't care about their credit score/rating, it is a rare person who is able/willing to navigate without some sort of credit.
- If you can afford $550/month to these folks, no reason that you can't split that amongst your current creditors.

[TBF]

7. It depends upon the state. You're in Colorado - so hopefully a few

from that state will respond or send you PMs about details in your state (which is why I'm bumping this up for my visibility).

We've been in credit card hell for 10 years (a few years of trying to get through grad school with credit cards, and then several more years of clean-up). However, we are in Texas where the law is extremely consumer friendly. Now that we have income I am working with 2 law firms - one consumer lawyer to settle/fight old debts (depending on the debt & interest etc...), one firm to help with the credit repair. NO NEW DEBT is our mantra of course, but there is still the old stuff to deal with.

Seven years ago when we were in a tight spot and found ourselves behind, we had no idea every single company would jack up their rates, and that put us into trouble very quickly. At least we graduated and got jobs, so we have hope we will eventually emerge from this. I was glad to see Obama fight back on this a little. It's got to be a problem for even more people now with the unemployment issues ...

[msongs]

8. don't give em a penny until after all debts have been settled..and contact your tax advisor first nt

[Lisa0825]

9. Check out the forums at the Credit Info Center.... they are the DU of credit repair.

Main page: http://www.creditinfocenter.com/

Forums: http://www.debt-consolidation-credit-repair-service.com/forums/


Sometimes settling can make your credit history even worse and for even longer. If you are not deeply knowledgable about credit repair, don't settle yet. Join this site and read, read, read.

[qb]

10. I second the advice to do more investigating. Creditors can be absolute bastards.

I know a guy who has been working with a reputable non-profit debt settlement organization. This org got agreements from the creditors for lower rates & smaller payments, etc., but later, one creditor jacked up the rates, changed the payment schedule & harassed him about making payments.

I have also heard these agreements fuck with your credit rating almost as bad as a bankruptcy.

[Bryn]

11. I am looking into help for my mother

She has approx. 35,000 in debt. I am her sole caretaker due to her dementia. Recently she has to start paying 452.00 for her meds out of her pocket because she has reached "donut hole" thing (whatever it is). All she has is SS and no assets.

This program was seen on CNN http://www.fasttrackdebtrelief.com/ don't know if it's good.

In 2003 I filed for bankruptcy chap. 7. It was very easy. Unfortunately our politicians helped to pass new bankruptcy law that makes it tougher now. I filed before it came into law. Time flies...now I have 2 and half years left for it to fall off my credit report.

Good luck. PM me if you happen to find new info. I am not sure about you having to pay $5K for that service. It seems cheaper to pay bankruptcy lawyer to clear your debts. I paid $1,800 upfront. Check to see if Colorado is bankruptcy friendly? Talk to bankruptcy attorney (consultation is usually free)

[prolesunited]

12. I wouldn't do it. There are no easy answers.

Most of these firms do nothing that you can't do for yourself. And in many cases, you are more screwed than you were before.

I'm not sure what you situation is, but what makes you think you can make these $550 monthly payments. If you don't, what action with the agency take? You might end up even worse off. Some companies will TAKE YOUR HOUSE if you default on them.

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre19.shtm
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre26.shtm
http://www.ftc.gov/bcp/menus/consumer/credit/debt.shtm

Lots of great do-it-yourself info here:
http://www.creditinfocenter.com/

This is a highly reputable nonprofit agency:
http://www.cccs.net/index.asp

He's tough, but he gives excellent advice that has helped thousands
http://www.daveramsey.com/

[NYCGirl]

13. I worked with a debt settlement company after being about

$50K in debt mostly due to a long-before failed business. It worked out nicely for me, taking about four years. Ended up paying about $20K and now I'm debt free.