Article 43


Friday, November 06, 2009

Settling Credit Card Debt


Friends and I have been debating how to stick it to the CREDIT CARD COMPANIES that are STICKING IT TO US - raising our rates to 20% AND OVER, even though we’re paying our bills on time, and trying very hard to keep our heads above water in today’s terrible FINANCIAL CLIMATE that favors bankers and big business over society.

Bankruptcy is off my list list until at the very end my financial rope, regardless of WHAT THE EXPERTS SAY. Why? Because job applications ask the question “Have you ever gone bankrupt?”.  Answer yes, and forget any possibility getting a job. Plus, I got enough problems with the ”HOW OLD ARE YOU” question, being an AMERICAN JOB HUNTER IN AMERICA, and a WHITE MALE.

I called two credit companies asking to reduce the rate of this 20+ year customer they just INCREASED over 50%. They told me to jack off.  Although a customer - and constant revenue stream of theirs - for most of my life, after talking with their customer service reps on the phone (some English challenged), I FELT MORE LIKE AN ADVERSARY, than valued customer whose business they want to keep.


REBEL - by missing a few payments, and forcing the greedy credit card companies to either negotiate or watch it’s monthly check from you stop.  That seems to be the only language they understand.

For people without a job, living off savings, and struggling not to be deadbeats - I don’t think it’s a bad move.  You’ll never get new credit anyway, and these BASTARD BANKS don’t seem to care one bit about doing the right thing.  Why should we?

Folks are WALKING AWAY FROM THEIR MORTAGES because of interest rates - maybe it’’s time to do the same with greedy credit card companies and their gouging.

A friend recenty negotiated a settlement of $3,000, as payoff to his $10,000 credit card bill, whose rate the credit card company raised to 19% last month. He couldn’t afford to pay anymore, thanks to the shylark tactics - and they agreed to settle.

Why you’re at it - FREEZE YOUR CREDIT REPORTS - to stick it to them some more, while HELPING PROTECT YOURSELF FROM IDENTITY THEFT, and READ THIS about collection agencies.


Honest Answers To A Difficult Question

When you decide to settle your debt, there are certain factors you need to take into consideration. Is your credit score more important than your monthly cash flow. i.e. by not settling your debt, and making large minimum payments, do you have enough money leftover every month? If you are skipping payments, you are already negatively impacting your credit, and should seriously consider debt settlement.

There is a SETTLEMENT STRATEGY that can positively affect your credit score.

Paid in Exchange for Deletion - 30% success rate.

A payment in exchange for deletion will immediately have a positive effect on your credit score. A debt settlement negotiation takes place with the creditor, where the client agrees to pay in exchange for a deletion letter. This deletion letter will remove the collection from your credit report, creating an almost instant boost to your credit score. Most if not all will require a full payment in order to agree to exchange for a deletion letter. This option has around a 30% success rate.

Important! A deletion letter must be received by the client before any payment is made. Most creditors will require full payment in order to agree to a PAYMENT IN EXCHANGE FOR DELETION.

Once the payment has been made to the creditors, the deletion letter is sent to all three credit bureaus. The collection is then deleted from your credit report. Payment in exchange for a deletion letter is a decision made by the collection agency or creditor. Not all companies will agree to a payment in exchange for deletion, even if it is an offer to pay in full. However, you should always go for the payment in exchange for deletion letter first. Always. It will not only eliminate the debt settlement effect on credit score, but more than likely increase your score immediately. Plus, you are now out of debt, and avoided the statute of limitations.

Where would you rather be in 3 years?

It goes without saying that most people believe paying off an account is always better than settling. That may be true, but what if your debt is escalating at a rate that you cannot keep up with due to interest? If you are barely making the minimum payments which is mostly interest anyway, or not paying at all then a settlement may benefit you in the long run. Debts higher than $20,000 can take over 20 years to pay off with interest when making minimum payments.

Think about it. You may have continued late payments on a large sum of debt for years to come as you are trying to pay off the debt. Depending on the amount of debt, you could be just paying interest.

Settle and Rebuild your credit...

Or you could settle the debt for possibly .50 on the dollar, and begin to rebuild your credit starting right now. Yes, a settlement will have a negative impact on your credit report in the beginning, but a settlement will have less weight on your score after two years (aged item), and the debt has been paid. So, where would you rather be in 3 years? Paying for the next 15 years, or paid and rebuilding your credit in the next 3 years. You may even be able to delete the item from your credit report when settling the debt, giving you an instant boost to your score!

What are statute of limitations?

If you are no longer making payments at all on a large collection you need to be concerned with the statute of limitations in your state. The statute of limitations is the amount of time a creditor has to legally file suit against you for collection of money. If you are within the time a creditor can file suit, you may end up with a judgment on you credit report, negatively effecting your score, and if they win the case you will still have to pay back the money. Settlement may have an initial negative impact on your credit score, but it will age and become less of an impact. In this instance, the debt settlement effect on credit report would fair better than a judgment on your credit report. Plus you would be free and clear of the statute of limitations or the possibility of being sued if you settled. The statute of limitations start on the date of last activity in your credit report. See my credit report.

How long do items get reported on my credit report?

Delinquencies (30 - 180 days): Can remain seven years from the date of the initial missed payment.

Collection accounts: Remain seven years from the date of the initial missed payment that led to the collection (the original delinquency date). When a collection account is paid in full, it will be marked “paid collection” on the credit report.

Charged-off accounts: Remain seven years from the date of the initial missed payment that led to the charge-off (the original delinquency date), even if payments are later made on the charged-off account.

Closed accounts: Closed accounts are accounts that are no longer available for further use. Closed accounts may or may not have a zero balance. Closed accounts with delinquencies remain seven years from the date they are reported closed, whether closed by the creditor or by the consumer, but the delinquency notation will be removed seven years after the delinquency occurred when pertaining to late payments. Positive closed accounts remain ten years from the closing date.

Lost credit card: If there are no delinquencies, credit cards that are reported lost will continue to be listed for two years from the date the card is reported lost. Delinquent payments that occurred before the card was lost are reported for seven years.

Bankruptcy: Chapters 7, 11, and 12 remain for ten years from the filing date. Chapter 13 remains seven years from the filing date. Accounts included in bankruptcy will remain seven years from the date they were reported as included in the bankruptcy.

Judgments: Remain seven years from the date the judgment is filed.

City, county, state, and federal tax liens : Unpaid tax liens remain fifteen years from the filing date. Paid tax liens remain seven years from the paid date of the lien.

Inquiries: Most inquiries listed on your credit report will remain for two years. All inquiries must remain for a minimum of one year from the date the inquiry was made. Some inquiries, such as employment or pre-approved offers of credit, will show only on a personal credit report pulled by you.

Is there anything that cannot be in my credit report?

Certain information cannot be in a credit report, including:

Medical information (unless you give your consent)

Notice of bankruptcy (Chapter 11) that is more than ten years old

Debts (including delinquent child support payments) that are more than seven years old

For California residents: records of arrest, information, or misdemeanor complaints must be removed after seven years. But under federal law, records of criminal convictions may remain on a credit report indefinitely.

Age, marital status, or race (if the request is from a current or prospective employer



Banks Doing More Credit Card Modifications

Clark Howard
October 1, 2009

The Washington Post reports that credit card lenders are now agreeing to lower outstanding balances, interest rates or even both in some cases.

Chase has admitted to modifications for 600,000 customers. Bank of America, meanwhile, is doing modifications for 1.2 million card holder accounts, according to the article.

If you are in a pickle, call your credit card company and try to obtain a modification. It is happening for people out there. Be organized and be realistic about what you can afford to pay when you talk to them. And don’t be afraid to play hardball by ignoring their first offer and holding out for a better deal.

Know that not all credit card lenders are not doing modifications in the same manner. Some require you to be delinquent. Others will only work with you if you’re current on your account.

Why are the banks that control credit cards even doing these modifications in the first place? Well, they’re scared of people going bankrupt, in which case they would get nothing. The charge-off rate in July was 10.5 percent for credit cards. Those are big money losses for the banks.

Keep in mind the tax implications of a modification. You won’t incur any tax penalty if you just get your interest rate reduced. But if the bank reduces the outstanding balance, you will get a tax bill for the money that’s written off.

Clark knows there are people listening to him who are incensed by what he’s saying. But these kinds of modifications have always been done in commercial lending under the name of “workouts.” They’re not unprecedented, they’re not evil and they’re not immoral. This is how business operates.



Negotiating Reduced Payments Can Hurt Credit Scores

Dear Experian,

I have several credit cards and am struggling to make house payments and credit card payments. If I make arrangements with a credit card company to pay the card off with a reduced amount, will that still affect my credit?


Dear SPS,

Negotiating a reduced payment with your credit card provider probably will have a negative affect on your credit scores.

When you negotiate a reduced pay off amount, you are actually settling the debt for less than you owe. As a result, the lender will likely report the account as “settled” rather than “paid.”

Anytime an account is reported as not paid in full or not paid as agreed, it will have a negative impact on credit scores.

Sometimes it is better to take the negative hit of a settled account to get the debt behind you. It shouldnt matter if your credit scores are impacted in the short term because you really don’t need to take on new debt until you have gotten control of your budget and your spending. Then you can concentrate on rebuilding a strong credit history, which will help you get the best rates when you are ready for new credit.



How To Protect Yourself Against Aggressive Debt Collectors

By Jay Slatkin
July 9, 2008

Millions of Americans are in debt, so it stands to reason that there are over 6,500 collection agencies in the U.S.. Most of these agencies operate under the law but a growing number of them do not. According to statistics from the Better Business Bureau, complaints filed against debt collectors rose 27% in 2007. Even if you legitimately owe the debt, you should know there are laws that protect you against harassment and the unfair practices often employed by these rogue debt collectors.  CNN MONEY DISCUSSES the Fair Debt Collection Practices Act and laws which protect the consumer. Details, inside…

Third-party debt collectors are regulated by the FAIR DEBT COLLECTION PRACTICES ACT (FDCPA) which is overseen by the FTC. Here are few practices which are prohibited under the law:


Debt collectors cannot make threats of violence against consumers or publish lists of those who don’t pay their debt. They may contact you in person, by mail, or by fax but can only call you between 8 a.m. and 9 p.m. unless you have agreed to alternate hours. They are also not allowed to use obscene language or call repeatedly (i.e. several times a day).

False statements

Debt collectors cannot misrepresent themselves. They cannot not falsely imply that they are attorneys, government agencies or that they work for a credit bureau. They cannot say that papers being sent you are legal forms if they are not, or say that they are not legal forms if they are.

Unfair practices

Debt collectors may not collect an amount greater than your debt, unless your state law permits it. They cannot use deception to make you accept collect calls or pay for telegrams. They also cannot threaten to take your property or contact you by postcard.

Linda Sherry of Consumer Action recommends that if a debt collector contacts you, the first thing you should do is ask for PROOF OF THE DEBT which should consist of a paper documentwith your signature stating that you applied for the debt. Also, be aware that some debts have a statute of limitations which could be from 3 to 15 years. Check your state’s laws to see if your debt is still collectible because once you pay a portion of the debt the clock resets again.

You can stop a debt collector from contacting you if you SUBMIT A WRITTEN REQUEST to them. Once they receive the letter, they cannot contact you again except to tell you there will be no more contact. Additionally, if you have an attorney presiding over your debt, they must contact the attorney instead of you.

Just because you are in debt, doesn’t mean that debt collectors have the right to harass you or operate outside of the law. If you feel that a debt collector has violated the law, you can file a complaint with your state’s ATTORNET GENERAL OFFICE and the Federal Trade Commission.


Posted by Elvis on 11/06/09 •
Section Dealing with Layoff
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