Need Advise with past due bills

Hurting-
Welcome to the board.
I have a few questions for you:

1. Have you pulled your credit reports? If not, I suggest doing this first. Find out which creditors are reporting (and if any CA's) and WHAT they are reporting.

2. How long ago did these accounts go sour? Have you checked the Statute of Limitations for you state? Someone else can provide you with a link to another site to check this.

3. Once you find this stuff out, we can help you better. If these things are past the SOL (meaning they can't sue you) then you have more negotiating power.

 

We need a lot more info. What state do you reside? How old are these debts? Are they all credit card? Is your situation stable? Job secure, health problems resolved? In general, a home equity loan is a terrible idea. WHat you are doing is placing your home at risk. You are taking unsecured debt and making it secured debt. Not a good idea in the least.

 

Keepmine-
GMTA!!!!
I agree a Home equity is a bad idea. He/she may not have to pay anything at all, or very little in exchange for deletion. Plus depending on how bad this is destroying the credit, there may be a chance of denial on the HELOC???

 

What you are talking about doing here is taking out a Home Equity Loan (HEL) and doing personal debt negotiation to squash the 7 debts that total $20,000.

These are a couple of large and separate issues here.

The first is weather you should do a HEL. This is going to be a personal decision. You will want to have stable employment like perhaps a postal worker position or other government service position. You want to have been financially very responsible (always pay your credit card off in full every month, never bounced a check, always pay your bills on time) for the last several years.

The second issue is weather you are comfortable doing debt negotiation. I have researched debt negotiation but I have never had to use this tactic. Here is what I know about it. Debt negotiation is best used as a method to dig yourself out of a hole when you know you are going to be 120 days (R5) to 180 days (R9) late on all credit payments except a mortgage. This generally happens when a single wage earner ends up out of work and/or temporarily disabled. The general theory is that as after you credit score goes down really far, the creditors are willing to take less that 100% to close accounts because they fear you will file for bankruptcy. I recommend that if you end up needing to do this sort of thing, you do it yourself.
First you stop paying you credit bills and change your phone number. Now that you are not making payments, you want to stockpile any income. Get you Equifax credit report and when all you accounts get to a R5 status, its time to make some phone calls. Tell the creditors that you want to settle the debts. If you have enough money at this point, you could offer 100% to have the accounts deleted. If you have very little cash, you offer 60% to have the accounts listed as closed. The main point of debt negotiation is to get out of debt, not to fix or maintain your credit rating. If you are lucky, have enough money, and don't have many credit cards, its possible to have all negative accounts deleted which would give you a good credit rating when you get done, but this is not really the main point of debt negotiation. In any case, if you get a creditor to agree to a payoff. You send them a settlement letter. You can modify the one I list here to what has been agreed to. Remember that as far as credit goes, its not the size of the debt that hurts, but rather the number of accounts that are derogatory, so you want to settle the small accounts first and work you way up. You also want to do all the negotiation fast so any deletions don't have time to show up on your credit report. In other words, you want to do all the negotiation wile you look like a basket case.
Points about settlements. Never give a penny unless you at least get a signed letter stating that the account is settled. Never use a personnel check or give them you bank account numbers.

Here is an example of a settlement letter.
-------------------------------------------------------
Date:
Creditor Address
City, State, Zip
Re: Account Number
Dear Sirs:
This letter is an offer to amicably settle the above account. It is not to be construed as an acknowledgment of my liability for this debt in any form.
I will pay your company the amount of $____ as full settlement of this account.
If you accept this agreement, I will send you a money order or certified cashiers check for the settlement amount of $______ in exchange for a full deletion of all references regarding this account from my credit profile and full satisfaction of the debt. This agreement is binding and will be void should you not hold up to your end of the agreement. Furthermore the debt will be deleted from my credit profile at all three credit bureaus or the bureaus your company regularly reports to in the course of doing business.
If you agree to the above, please acknowledge with your signature and return a copy to me. Upon receipt of this signed acknowledgment, I will promptly send you a money order or cashiers check in the amount stated above.
Notice: This agreement is restricted. This is not a renewed promise to pay but rather a restricted settlement offer only. By not signing below, you agree that the debt has not been renewed nor has any concrete written agreements been exchanged.
Creditorâ??s Authorized Signature: _____________________________ Date:____________
Name Title :
Sincerely,
Do not sign or date letter (This is necessary to avoid renewing the debt, should the creditor refuse to agree.)
------------------------------------------------------------
Good luck.

 

Welcome to the board, hurting.

I agree with the others that you should negotiate according to your current means, without putting your home at risk. If you lose your home, you'll be considered a bad risk to rent an apartment, too.

KHM, what does GMTA mean???

 

RIna-
GMTA Great minds thinks alike.

 

Good morning Kellie! First time I've been accused of having a great mind! Have a good day.

 

hurting,

CA=collection agency and HELOC is home equity line of credit.

Looks like you owe roughly 21K. Are you getting pressed hard by collection agencies or, just the letters offering settlement. I'd think at the 2 year mark, you ought to be abl? to wring out something below 50% on Amex and MBNA. Sears and the other small ones may be more stubborn because 50% of a couple of hundred isn't that much. Can you make the deal without touching the equity in your home?

 

I think with Sears 70% is the best you will get. Most people have only gotten 80%.

As for the others, take their offer on the condition that they delete the tradeline, or mark it as paid as agreed, never late. Get everything in writing.