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My Debt Settlement Progression

Posts: 176
Credits: 2539.6
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Below is my original post of April 26th when I responded on Blackbeast thread 'my journey begins today'. These are my debts and I will chronicle my attempts at settlement.

I have Citi 1-- 18k
Citi 2-- 18 k
Chase-- 21k
Bof A --40 k

Right now I am 18 days late on one citi and 36 days late on the other.
I am current on the other two but will be late as of May.

Citi has called about 13 times a day. I talk to them about once a week and tell them the same thing. I have 2 mortgages, one very new and no equity and the other I am upside down on. Cars are 18 years old. I took a $12 hour pay cut and no longer get overtime.
They want me to go on a pymt plan but I hope to settle, has not been mentioned yet.
I will post updates. Ask any questions and I will try to answer. it looks like we are about on the same timeframe...
thanks,
Kaylee

To add to the above, I was laid off last year for 4 months then came back at $12 hour less and no overtime. In the summer some balance transfers expired, all 4 cards raised rate to 29% with never a late pymt. and always paying more than minimum. Chase doubled percentage of what was due meaning my pymt. doubled and they all decreased my available credit.

The best way to picture it is that last summer had I only been paying minimum due my pymts would have been $1500 but I paid $2500 every month spread over all 4 cards. Now I can afford exactly $1500 for credit card debt but my minimum would be $4000.

I am still getting many calls but just stick to my story and although it drives me crazy I just bear with it...
thanks for listening.




SC

Posts: 3618
Credits: 36402.4

Sub: #1 Sometimes people can't take this stress and thus take the help o
Wed, 04/28/2010 - 23:07

Sometimes people can't take this stress and thus take the help of a settlement firm. However, I'm sure that you'll be able to come out of it with flying colors. Just hang tight and keep us posted.




Unregistered

Sub: #2 Another tough situation. Much as I have advocated in other thre
Thu, 04/29/2010 - 05:35

Another tough situation. Much as I have advocated in other threads, please be sure you are now living within your means. Do not incur more debt and compound the problem. If a lesson is learned, then we are all better off for it. Hopefully, you will be able to find reasonable settlements. Years of living high takes years of living low to get back to the baseline. Best wishes.




blackbeasst
Debt Samaritan
Posts: 196
Credits: 74.23

Sub: #3 word of advice kaylee since im going through it to, if you want
Thu, 04/29/2010 - 05:50

word of advice kaylee since im going through it to, if you want a settlement do not make any payment to them no matter how small it is! i got a call from discover just this morning saying that if i make a $16 payment (i owe $225ish as a minimum now) that it will prevent me from reporting to the credit report. if you do that you will more than likely start the process over since you made a payment.

oh, and stick to your story. don't stray each time and don't give info unless you are asked about it. and then make it short and sweet :)

just out of curiosity do you have the cash on hand to pay a 30% settlement?




kaylee
Debt Samaritan
Posts: 176
Credits: 2539.6

Sub: #4 Thanks everyone! Stavos, just so you know, I wasn't exacly liv
Thu, 04/29/2010 - 06:31

Thanks everyone!

Stavos, just so you know, I wasn't exacly living high on the hog. My debt of 60k spiralled to over 90k just since last summer with all that detailed above but the original debt I incurred due to a catastrophic medical situation in 2005 that I was still crawling out from.

Blackbeast, I see now that not paying any is the way to do it and won't be making any more payments, originally I thought that I would try to juggle them since I could not figure out how if they all settled at same time I would be able to pay it.

Cash reserves---No, I have $4000 cash now and $1500-2000 to put towards it every month.
I have my 401k of $40k and I am debating whether to cash it in or not. Did you?
It is still kind of early in my game. Thanks again.
Kaylee




blackbeasst
Debt Samaritan
Posts: 196
Credits: 74.23

Sub: #5 well at least you have your 401k as reserve. it sucks but i thin
Thu, 04/29/2010 - 06:43

well at least you have your 401k as reserve. it sucks but i think thats the only way you will be able to pay off the settlements. doesn't seem to add up that you will have enough otherwise.

not sure if you saw one of my latest posts describing my situation, but i was going to rob peter (use my wifes good credit and put on one of her cards) to pay paul (my debt settlements). we are now thinking thats not smart and considering talking to an attorney about bk.




blackbeasst
Debt Samaritan
Posts: 196
Credits: 74.23

Sub: #6 kaylee, don't forget, or if you didn't know, that whatever % you
Thu, 04/29/2010 - 07:08

kaylee, don't forget, or if you didn't know, that whatever % you settle at the remaining % you will get a 1099 from the CC company and you will have to report that as "income". so if you get a 30% settlement across the board you are looking at reporting 70% which is almost $70k at tax time.

just a heads up!




Debt Free to Be
Debt Samaritan
Posts: 412
Credits: 5209.9

Sub: #7 But if you are insolvent per the IRS rules at the time of the se
Thu, 04/29/2010 - 08:02

But if you are insolvent per the IRS rules at the time of the settlement you don't have to pay tax on the 1099. Talk to a tax professional about this and make sure you keep the bank statements, investment statements and home value information for the month you settled so that you can prove you were insolvent at the time of the settlement.

As for taking money out of the 401(k). If it's a hardship loan that is not that big of a deal. Your monthly contributions into the 401 will just go to pay back the loan you made to yourself. But if you do a withdrawal, then you would have to pay tax and penalties on the amount withdrawn which can dramatically reduce the amount you get depending on your tax bracket. Again I suggest you talk to a tax professional for a better picture of how this will affect you.

I will keep watching and hope your journey goes super well!




blackbeasst
Debt Samaritan
Posts: 196
Credits: 74.23

Sub: #8 very true DFTB. im guessing that only CC debt is considered in t
Thu, 04/29/2010 - 08:26

very true DFTB. im guessing that only CC debt is considered in the insolvency equation? house and car doesn't affect does it?




Unregistered

Sub: #9 Quote:Originally Posted by kayleeThanks everyone! Stavos, just
Thu, 04/29/2010 - 08:37

Quote:
Originally Posted bykaylee
Thanks everyone!
Stavos, just so you know, I wasn't exacly living high on the hog. My debt of 60k spiralled to over 90k just since last summer with all that detailed above but the original debt I incurred due to a catastrophic medical situation in 2005 that I was still crawling out from.
Blackbeast, I see now that not paying any is the way to do it and won't be making any more payments, originally I thought that I would try to juggle them since I could not figure out how if they all settled at same time I would be able to pay it.
Cash reserves---No, I have $4000 cash now and $1500-2000 to put towards it every month.
I have my 401k of $40k and I am debating whether to cash it in or not. Did you?
It is still kind of early in my game. Thanks again.
Kaylee


No offense meant Kaylee. But I was pointing out that you were living beyond your means regardless of why you were (job, health, divorce etc). The only way to get back on track is to first spend less than you make and second spend even less to pay off old debts. I know a lot of people here have good reasons for being in debt, but good reasons don't pay the bills. You must not live well below your means to catch up. Best of luck.




Debt Free to Be
Debt Samaritan
Posts: 412
Credits: 5209.9

Sub: #10 No. All debts and assets are considered So if you have a lot o
Thu, 04/29/2010 - 09:25

No. All debts and assets are considered So if you have a lot of equity in your home for instance or a high balance in your 401(k) then you may have to pay tax on the forgiven debt. The definition of insolvent is that you owe more to creditors than your assets are worth. That's why it's important to talk to your tax professional and see if you are actually going to have to pay tax on it.




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