Debt Negotiation Advice
Credit Card Negotiation vs. Doing Nothing?
I currently have over $25,000.00 worth of credit card debt from medical bills due to an auto accident that happened a couple years ago. The accident is going to be settled within the next year since I was not at fault, so I will eventually be able to pay off the debt completely. I have contacted the cc card companies to see if they'll lower my interest rate--no luck. However, I heard about a company that will negotiate my debt with the cc companies & will lower my debt up to 60% (for a fee, of course). Therefore, my monthly cc payments will go down & I will owe less money overall. The downside is that this will ruin my credit rating & it will take 6 months or so to fix it. Would it be better to do nothing & wait for the settlement to pay off all the debt at once & not mess with credit rating recovery (I want to purchase a home after the settlement)? Or should I do the debt negotiation & go through the process of rebuilding good credit again? Thanks! (Only serious answers please) By "do nothing", I mean still pay the minimum payment every month, but not negotiate the debt with the company. Sorry about the confusion. I am not going to file for bankruptcy. From what I've seen, this is the worst option for me (other than not pay even the minimum payments). I've seen that it can take 10 years to establish good credit after a bankruptcy.
Public Comments
- By doing nothing do you mean continuing to make payments or not even that? Because if you stop making payments, you credit will be trashed anyways and eventually they may sue you, specially if you are expecting a settlement. If you can continue to make at least minimum payments, and you are certain that you will receive a settlement, then continue doing so. Bankrate.com has articles about these debt settlement companies, and their opinions of them generally aren't very good, even of the "reputable" ones. I would not use them unless I am already in serious trouble and haven't been making payments.
- Contact the creditors again, and see if they will lower the interest rate, if not, ask them to stop any other fees you are paying, if they are still not willing to budge, ask them to lower your minimum payment or to put your account in a program to rehabilitate the account if it is in bad standing. If none of this works, ask for a supervisor and go throught the list of options again. Remain calm and professional and just let them know you need help and you do intend to pay very soon. I would not suggest paying more money to get out of paying the first amount of money, plus, you already know that things will change in another year. Finally, you may want to find a credit card with a 0% interest rate offer and transfer the debt over so that you are not penalized further with interest.
- Don't wast your money on those rats. File bankruptcy? Go to the clerk of the court and they will give you everything you need. You can get information about it on the web. Don't wait it only gets worse, look at all your options. Any other questions?
- The credit card companies are not going to put your debt on hold for several months. Can I assume that you can't even make the minimum payments during this time? As for bankruptcy...not sure about that route either. I need to research it, as I am not sure they take pending insurance settlements into account. After 3-4 months the credit card companies will charge off your debt and send it to a collection agency. At that point those rodents will offer you a settlement of 20%-30% discount. But in order to fix your credit you would need to convince them to delete this from your credit report. Without knowing your current situation I can't give you much better advice. But the collection agent option seems best to me.
- I can help you - please send me an email.
