I am behind on two credit cards, and cannot make payments. Over limit and late fees are PILING up! Behind 3 months on one: $4600 and behind 5 months on other: $6200. Talked about settling...decided against it. Discussed BK with attorney...We have a piece of land worth about $5000 more than we owe on it. Attorney said BK trustee would either force sale of land or require a "white Knight" to give us $5000 to give to the trustee. We do not have 5K to give to anyone!! What can we do?? Is letting the cards charge off our best option. I have read posts about this option, but I am a little unclear as to what to do if collection agencies garnish wages or get a judgement. Please help! Thanks!
First, I take it you've been in contact with your creditors about the account and begged and pleaded and gnashed your teeth? Second, if you declare bankruptcy, they will likely force you to sell the land. As such, if there is absolutely, positively no way to work with your creditors, may I recommend that you sell the land of your own accord, if you can do so quickly enough, instead of declaring bankruptcy and stick the money in the bank and use it to get current, and stay current, on your credit cards. Third, trust me, charge off is bad. After the account charges off, it will be assigned to collection, and these folks will make your life a living hell. Charge Off is murder on your credit score. And, with an amount this large, if you do not get on a payment plan with the CA, there is always the possiblity they would attempt to sue you. Whether they can garnish or not depends on your state of residence. However, make no mistake, judgement is pretty much always a bad thing. You mentioned you discarded settlement on the accounts. Well, settlement on an credit account can mean a lot of different things. With MBNA, many years ago, my settlement offer was to them--when I found myself suddenly in a situation where they was no way in hell I could keep the account current--was for me to forfeit my charging priveleges (basically close the account with a balance still on it) in exchange for an 8% interest rate, suspension of over limit fees and immediately bringing the account current with only a token payment from me. How did I get it? I called in, cried like a baby, and told them I really wanted to pay the money back but due to circumstances beyong my control, I just couldn't keep up without some help. And they gave it to me. And, finally, it is of paramount importance that you keep your wits about you and do everything you can to remain calm. You'll need a clear head to work through this, and every second you spend in panic mode is one in which you're opening yourself up to rash, and potentially damaging, decisions. Lots of good folks here to give you the best advice we can, so take heart--you're suddenly among friends. -- cnswift
I wouldn't consider bk for the 10K cc debt unless there is more a lot more debt than these 2 cards. What about selling the land and using that to settle the cc debt? As to garnishment, that can't happen unless you are sued and lose. Also, does your state allow wage garnishments? DO you own a home? Again, state law may allow a lein to be placed on the home or your property. But, nothing can be done unless someone actually files suit and wins.
Thanks for the response. I really don't want to sell the land. As far as settling, Chase offfered 50% of the 6200. Is this good? Aren't there some negative implications with settling? Like IRS and bad credit? Discover Card says they don't settle.
Can you borrow against the land to come current on the credit cards (through negotiating with the companies?) cariba
our credit is so bad we couldn't get a loan, and i'm not sure i want to increase our payment on land. which is better, all things considered, settlement or charge-off?
How are you doing with Your Mortgage, Car Payments, Ect.? If you are struggling with them, a Suggestion would be to Contact CCCS of Maine, You would have to stop Using your Cards, but you could get your interest reduced to anywhere from6% and up , get all of the Overlimit and late fees . also you would only have to make one payment for you debts, after the 3rd payment Most Credit Card Payments will bring your account current.. It will give you a light at the end of the tunnel. They only way to be successful with CCCS, ect.. is to make all of your required payments on time.. It may not be the best option for you.. It would not hurt to check it out.. Take Care.. Ruby
Do you have an appraisal on the land ? I think that if you have a mortgage on the property they can't force you to sell it unless your equity is high enough to pay off the mortgage and costs. The trustee might put a lien on it,but the appraisal would probably show a "distress sale" equity value a lot lower than you think.
There are tax implications for a partial-payment settlement, yes. You'll recieve a 1099 for the forgiven debt, and they'll send a copy to IRS so you won't be able to get out of it. Taxes would be another grand here, depending on your marginal tax rate. As for the bad credit, settling is bad yes--but not as bad as bankruptcy. My recommendation is to try to settle a payment plan with them, as opposed to a payoff. If you can't do it on your own, CCCS likely can do it for you. They're nice folks, and if you're already on the verge of bankruptcy, I guarantee they will not make your situation worse--and, indeed, very likely will be able to help. Watch them like hawks though. Oh yes, and Discover lies. They do settle--they did with me! If you'd post a few more specifics about your current credit/financial situation, folks might be able to give some better advice. -- cnswift
CCCS notations on your tradelines will be the Kiss Of Death for your FICO score for quite some time. Think long and hard about it. I've heard that multiple CCSS notations are almost as bad as a bk7 on your report. RM
what's the best I can do?? we have 2 cc 10k total. . we have been struggling with all debts for a year. We are over-extended. We just got caught up on our mortgages. yes, we already have a second! our first is 107k, our second is 33k. home is worth about 170k. Wife changed careers year and a half ago. we also have 25k auto loan. we have settled on two cc in the past year. Received a 1099 on one but not the other. have 1 charge off. We haven't paid one cc in 5 mos. the other hasn't been paid in 3 mos. trying to catch up on other bills. so one cc is close to charge off. Any advice? Thanks in advance.
Well, with 2 settlements and 2 more in or soon to be in chargeoff, your credit is pretty well shot. Why not sell the property that you have 5K worth of equity in and see if you can settle those 2 remaining credit cards?
Settling and charge off are both pretty bad, credit wise. Although I don't know how settlement is rated (I think R7), charge-off is likely worse. The only way to restore your credit at this point is to start building new, good credit. If you declare bankruptcy you will have to wait till it's discharged to start doing that. If you settle on these accounts, you can start rebuilding now. Get a couple of secured cards--the limits won't be high enough for it to get out of hand. Make sure they offer online payment, and start using them and paying them off every month for awhile. After you're on a firmer financial footing, carrying a small balance here and there. If you've got any remaining high limit cards, go seal them in ice. With your financial situation like it is, having a high limit card in your wallet is likely a bad idea I'd say. -- cnswift
There is no way they can take any personal property from you unless you have a bad bk lawyer... or unless the personal property was used to secure the credit.. Most creditors are cool and want their money try calling them and making a payment schedule... its way better than filing for bk or letting it go to charge off... Kev
