Would Debt Settlement Help with my Credit Card Debt?
I am collecting social security. I lost my job in Oct., and will be able to collect unemployment for a while, but have too much unsecured debt at this point in my life. I have a mortgage which I can pay, but will not be able to keep up with credit cards. I have never been late paying anything!
Would debt settlement help me?
—jean
Debt Settlement is certainly an effective approach to get from under a crushing amount of credit card debt – for the suitable candidate. The best methods to use in determining suitability will weigh heavily on the balances on your credit cards and other revolving debt, and also who your creditors are.
Each of your creditors have their own set policies, timing and percentage of balance targets when negotiating delinquent accounts. You will generally need to speak with a reliable source that is willing to share with you what your particular creditors are willing to do with balance concessions. When you have this detail you can better target the next suitability measure.
Your ability to tap funding sources now and over a projected period of time in order to pay the newly negotiated credit card settlements.
A huge factor in determining whether settling with your banks is an appropriate option will be how quickly you will are able to pay the settlements. There are flexibilities with debt settlement in this regard that are missing from your other legitimate options such as credit counseling or chapter 13 bankruptcy. The flexibilities cannot be extended too far however. Over the years of working with consumers and assisting them to settle their debts, I long ago identified a settlement program should not be stretched beyond 18 months whenever possible. I am not saying you would not be successful in settling your debts using a longer time line, but after 18 months the risks associated with the debt settlement approach begin to become more problematic.
Your immediate needs and goals factor into choosing debt settlement.
Will you be able to budget your current and projected income, savings and cash flow to meet your basic needs and goals now and into the near future while meeting your time lines for settlement. Needs include your combined monthly bills and overhead if you had no credit card debt. Goals can be retirement, relocation, travel, reliable transportation etc…
Given the limited background information you shared as part of your question, I would encourage you find out if you can qualify for chapter 7 discharge of your unsecured debt. The reason I suggest this is because your only 2 sources of income you identified are SS and unemployment. The situation you describe you are in is not generally one that is consistent with choosing debt settlement as the optimal solution.
If you learn that you cannot qualify for chapter 7, or qualify, but would be forced to give up your home, or other valuable assets and items as part of a chapter 7 bankruptcy, then look to debt settlement as an alternative to bankruptcy.
You should schedule a consultation with a bankruptcy attorney local to you. You can go to the National Association of Consumer Bankruptcy Attorneys website here: www.nacba.org. Search using your zip code. Many bankruptcy attorneys offer no cost initial consultations. Call a few of them until you find one who does.
I also want to encourage you to reach out to us through the online consultation request form found here: Request a CRN Consultation, or by calling us toll free at 800-939-8357 and press 2. You will be able to speak with a CRN professional who works with our members and their creditors everyday.
The consults are provided at no cost to you and will help you determine more thoroughly the best method for you to gain relief from debt.
Readers who have a concern about whether debt settlement is an option worth considering given your specific circumstances are welcome to post in the comments below for feedback.
About Michael BoveeMichael started CRN in 2004 with a mission to provide people in need with detailed debt and credit help and education. Michael has participated as an expert panelist in federal consumer protection rule making, collaborated on state law changes governing debt consolidation, has worked as an expert witness in court matters related to the debt relief industry. He is available to speak with you about your financial struggle and helps people resolve their debt problems daily.
Hi, thanks for the responces.
If the attorney firm that send me a letter did not instate that I have 30 days to validate , is considered violating the FDCPA if did not instate that on the letter?
Without seeing the letter and getting more details from you I cannot really comment other than to say collection letters are generally required to have a notice on them about your rights to dispute or request validation of a debt they are collecting.
If that notice is missing it would probably be worth the time to run your scenario, the collection letter etc., by an experienced consumer law attorney.
Thanks for responding promptly
I think the best thing for me rigtht now is just wait. I don’t have the money to pay the down payment, and if I continue to respond to them it will just validate that is my debt.
If the creditor summon me, can I ask for validation in court to prove is my debt? Also I would like to know what’s the statute limitation of credit card debt in
Washington state?
Debt validation requests are your right. When and why to request validation is different from one set of circumstances to the next in my experience. There are some who suggest you should always make a written request for debt validation no matter what. I am not in that camp.
Requesting validation of a debt once you are sued is not really the type of “debt validation” you read about on the web. Once sued, the type of validation I assume you are referring to would actually be part of discovery. The time for debt validation outlined in the Fair Debt Collection Practices Act (FDCPA) is before a lawsuit is filed and served.
The SOL in Washington for an open account, which is what a credit card is, goes 3 years from the date of last payment. I believe there have been some WA court cases that have muddied this timeline by designating the credit card as a written contract, which would be a 6 year SOL. Speaking with a consumer law attorney with creditor and collection defense experience in WA would clear this timeline up for you.
Hi Michael,
I just want to correct the original creditor . The original creditor is citifinancial and the amount I owe is $4,139. I already contacted them on payment plan but they refused to ,there asking a 20% down payment then I can do a monthly payment. As of right I told them I can’t do any down payment and they gave a due .date until the end of this month and also I not to sure about this loan with citifinancial, should I request a validation letter for this debt? And since. I moved to washington and they don’t have my current address should I update them my new address?
Thanks for the follow up details. I assume that this was a personal signature loan and not a credit card then?
Your stress level with this hanging over your head is understandable. It may help for you to understand the collection process a bit.
1. You can only do what you can do. They will offer up a payment plan, but only with 20% down. You don’t have it.
What can they do at this point?
2. They will continue to call and may send additional letters. You can respond to any attempts to collect by suggesting payments based on what you are certain you can afford. They key here is knowing with certainty you will be able to make any payments you agree to if on a monthly basis. You will also want to make any payment agreement knowing the money is knocking down the balance. agreeing to a small payment if interest is still accumulating on the debt could mean you are not making any headway on paying off the debt.
What happens if you do not reach an agreement you can pay?
The current collector is either working for citifinancial or a debt buyer. Either way, if the attorney trying to collect cannot hook you with a payment, your account may end up with a different collector who may be more willing or able to agree to payments you can afford.
What if the collection efforts get aggressive and head to the courts where they will try to get a judgment?
Debts can be settled and negotiated at any stage of collection. You will be able to set up payments or settle the account even at the court level.
I would recommend you keep on saving up as much money as you can as quickly as you can and offer a settlement when you have close to half the amount.
Should you update them with your new address?
That is up to you. If mail is going to a place where you will be able to know what is sent, you may be better just keeping things as they are.
It would be helpful to know who if the debt collector is working for citi financial or a debt buyer. A quick way to find that out is to call citi financial and ask who they either placed the account with, or sold it to. Let me know what you find out.
Hi thanks for the reply.
The creditor is originally from Citibank, and when I respond to the mail its an attorney office. There claiming I owe $4,535 . I tried to settle with them with a monthly that I can afford right now, but they want me to put 20% down payment , and I don’t have that down payment. I don’t know how old is the debt and last payment . I stressing and I don’t know what to do. I’m just trying to get back on my foot again. Should I give the attorney my new address?
Hi,
I just moved from Hawaii to Washington and my mom back home received a letter from a debt collector attorney letter claiming debt unpaid. I tried working somekind of payment plan but they refused, I told them that i could not afford the amount there asking me, I also told them that I’m not sure if I owed them that amount there claiming.. can I get summon if I lived here in Washington.
Yes, you can be sued in Washington now that you live there. The attorney firm would have to locate you, but they are not likely licensed in Washington. If they are not, they would have to connect with a debt collection attorney in Washington. There are many. If the attorney on the Islands cannot get you to pay or settle, the debt may go back to who owns it for further collection efforts. You would be able to negotiate and work toward a settlement you can afford with the debt owner or with a debt collector who may get the account later.
Who is the creditor on the account? Have you gotten communication from someone other the the original creditor via letter or phone calls? If so, who?
How old is the debt (when you last made a payment)?
What about the amount the attorney says you owe causes you to question how much they say you owe?
If you can answer these questions in a comment reply I may have some more feedback.