Your Questions About How To Pay Off Credit Cards For Less Than You Owe

Laura asks…

How to get credit card companies to settle for less than amount you owe?

I am just over 30 days deliquent with my credit cards and want to settle them to pay off. No one will even consider it. I have a way to get money to pay them all off, but only if they can accept a lesser amount. What are my options besides bankruptcy or consumer credit counseling.

richmama answers:

Credcards.maclenet.com – transfer balance to one of these credit cards. It will provide 0% interest rate for 12-18 months.

Charles asks…

Will credit collection company usually settle for less than owed and if so how much?

A couple years back I lost my job. I had about four different credit cards with four different companies open at that time. Unfortunately, when I lost my job I could not longer pay on any of these which resulted in all of these accounts being sent to collections!! I am now in the process of trying to pay off everything and repair my credit to buy a house. I am about $4700.00 in debt and have the money to pay it off in one big lump sum. Will the credit collection company settle for less then this? If so how much? Is it better to call each company I had a credit card with (Capital One, Target Etc..) and tell them that in the past I had an account with them and they sent it to collections and now I have the money and would like to pay it off in full for less? Will they do this? Please Help! Thank you ! God Bless

richmama answers:

They will negotiate, LISTEN to the others here concerning admitting all the debt and the desire to come clean.
Your credit already damaged, why should you pay them years of trumped up late fee and over limit fee at $35.00 for who knows how many months.
Your actual debt to these guys is probably less than a third of the current balances.

Here are a couple of legit sites to help YOU from paying what you really shouldn’t.

Good Luck!

Richard asks…

How legit are these for paying off debt?

How legit/what do you know about those cheesy, gimmicky “consolidate your debt into one low monthly fee at less than the amount you owe“? Are they a scam, or would this work in my case?

My family and I owe:
over three thousand in credit card debt (2 different cards)
over one thousand to an attorney

richmama answers:

No, do not fall for these ads. It would take you forever to pay off your debt with these agencies. Your debt isn’t really that high. You could manage it by yourself. First step is not to charge anything else and to pay as much as you can to each card every month. Ask the attorney if he could put you on a payment plan that would be manageable. The more you pay on the credit cards the better. You need to get it down to the point that you can pay them off. In the future, never put more on a card than you can pay off at the end of the month. This saves you from getting interest tacked on. Good luck

Daniel asks…

Serious credit card question…Please respond?

Ok I have a serious question and before I start please do not answer with you shouldn’t have been so stupid in the first place. It is done with and happened in the past. I had roughly $15-17,000 in credit card debt and chose to settle on most of my credit cards. I was able through the help of my family to settle to pay them all off. Most went to charge off status and I was getting calls everyday. I was also making next to no money so I was unable to pay off during that time. I did not want to declare bankruptcy but now this year when tax time comes I will more than likely have to declare around what I believe to be $3-4 thousand on my taxes. My total gross earnings for 2008 is around $10 thousand dollars. Will this help me to not have to owe as much on the 1099 c gifted tax that I will have to put as earned income. I just dont have that kind of money to pay the IRS in March. Also, if I am able to pay the IRS the gifted money why wont the creditors delete my record as settled for less than full amount ???? The credit card companies get the money I settled for and the difference that was owed to them from the IRS when they sent that form in… so in reality they get their money all of it??? Right?? So I end up paying this why cant these marks be deleted??? I had an excellent credit score of 758 before these mistakes and now the last time I checked it is at 654. I am just asking if there are any credit specialists or people with the knowledge of how this works. I am sorry this is so long but I needed to ask this question.

Thanks for your help.

richmama answers:

First off, you might not get the 1099-Cs for 2008. Even though the creditor accepted the settlement in 2008, until they actually write the amounts off their books, you won’t get the form.

The year you get the form you have two avenues:
1. Add it to your tax return (1040, line 21) and pay the tax.
2. Get IRS publication 4681 and determine if you are insolvent and if so, by how much. If this covers the debt, then you can postpone including it in come with form 982 (see the publication).

For example, you settled the $15,000 in debt for $5000, you could get a 1099-C for $10,000.

If your income jumps from $10,000 to $20,000, your tax bill would jump from $105 to $1256 as you are still mostly in the 10% tax bracket.

To claim insolvency, you don’t look at income, you look at assets and debts. You pretend to sell everything you own (including the shirt off your back) and determine that just prior to the debt cancellation, could you have paid EVERYONE every penny you owed. (That’s including the full $15-17,000 in debt.) If the answer is no, you are insolvent. If you could have paid all but $3000, then $3000 is the degree you were insolvent.

Powered by Yahoo! Answers

Be Sociable, Share!

Speak Your Mind

*