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Settling Debt Concerns
ins0mniac
Registered User regular
Registered User regular
Hello everyone!
Just last night, on my way home from a spectacular date, I decided to buy a $5 scratch ticket... And won $10,000! After cashing it in here in the wondeful state of Taxachusetts, the Feds and State took 30% leaving me with 7,000. This is amazing to me as I've been struggling financially for some time now. So my first course of action is to eliminate all my debt.
All together I owe $4468 over 3 credit cards. All three have been delinquent for months, and all 3 are now handled by collection agencies rather than the card company themselves. After talking with the representatives, 2 of the companies are willing to settle for less than I owe.
On one, the balance is 1981.31, willing to settle for 1585, saving $396 in the process.
On another, the balance is 1601.20, willing to settle for 1120, saving $480.
On contacting the third company, the representative was the only one to let me know that it'll have a pretty big hit to my credit report and may want to reconsider settling versus paying in full.
Now here's my dilemma. My credit is fucked anyway. As I said, all 3 of these cards have been in collection for months and I haven't made any payments in just as long. Also, About 2 months ago my car was repossessed (got it back 2 days later, wasn't auctioned or anything). So my credit report as far as I'm concerned cant really get any worse, right?
It it a good idea to settle these debts for less than I owe, but in turn take a hit to my already terrible credit score?
I got really lucky and I'm trying to use this money responsibly, so I appreciate the advice in advance.
Just last night, on my way home from a spectacular date, I decided to buy a $5 scratch ticket... And won $10,000! After cashing it in here in the wondeful state of Taxachusetts, the Feds and State took 30% leaving me with 7,000. This is amazing to me as I've been struggling financially for some time now. So my first course of action is to eliminate all my debt.
All together I owe $4468 over 3 credit cards. All three have been delinquent for months, and all 3 are now handled by collection agencies rather than the card company themselves. After talking with the representatives, 2 of the companies are willing to settle for less than I owe.
On one, the balance is 1981.31, willing to settle for 1585, saving $396 in the process.
On another, the balance is 1601.20, willing to settle for 1120, saving $480.
On contacting the third company, the representative was the only one to let me know that it'll have a pretty big hit to my credit report and may want to reconsider settling versus paying in full.
Now here's my dilemma. My credit is fucked anyway. As I said, all 3 of these cards have been in collection for months and I haven't made any payments in just as long. Also, About 2 months ago my car was repossessed (got it back 2 days later, wasn't auctioned or anything). So my credit report as far as I'm concerned cant really get any worse, right?
It it a good idea to settle these debts for less than I owe, but in turn take a hit to my already terrible credit score?
I got really lucky and I'm trying to use this money responsibly, so I appreciate the advice in advance.
X-Box Live Gamertag: Merciless319
ins0mniac on
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If you're concerned about your score, find out if you can keep any of these cards open after paying the full balance. It will seriously shorten your recovery time.
Else, pay them what they'll settle for and ride out the seven years this shit will stain your record.
if the cards are in collections they are probably already closed.
You could contact them again and see if they would be willing to remove the accounts from your credit report in exchange for paying in full. They have the ability to do this, if they want. If you settle, it will be marked on your account as Settled, which is bad. Less bad but still not as good is for them to mark it PAID AS AGREED, which they usually won't do unless you are really stubborn with them. But if you have the money, I would try and get them to remove the accounts from all three credit reports.
You may also want to consider this: http://lifehacker.com/5890341/place-unexpected-cash-windfalls-in-a-cd
Credit scores are crazy crazy things. Paying off what you owe will actually LOWER your credit score if you don't do it right, at least for the foreseeable future.
Also, get everything in writing before you give them a dime.
So just don't even give them an inch when it comes to the point of getting these things off your report. Make it clear you have the money and want to pay, hell even tell them you won the lottery so they know it is really easy for you to pay.
And again what Sentry said: get everything in writing before you give them a dime, or it didn't happen. Collection agencies routinely lie through their teeth or at least bend the truth to a horrible degree.
Also, use this get out of debt free card as an opportunity to reevaluate your spending habits, maybe throw that extra money into an emergency fund or something.