I have debt that is about 4 yrs old that I would like to settle or pay off. Some are/were with collection agencies (not sure now where they are because of the age of the debt). The debts are unsecured (electric, cable, etc.) and some are secured. I also had a foreclosure of the same age. While I know that the foreclosure will still hurt my credit score until 7 yrs, I would like to start the process of healing my credit score so that when the 7 yrs for the foreclosure to drop off is up, my credit will be in a better position. My credit score currently is around 574.
I have heard that settling for less is good and paying the full amount is good. I would like to know what is going to help more in the long run. I also heard that getting a secured credit card can help. Is this true? What would my best route be in correcting the wrongs?
Also, where should this process start? Should I ask the collections to validate the debt first or should I deal directly with the main company first?
The electric bills and such, even the total debt (minus the foreclosure) does not amount to much. The total amount is under 00.00.
My foreclosure was over 3 years ago.
I am not sure about the 1099C. I assume that I did receive it but I am not sure if I did anything with it on my taxes (ex boyfriend did my taxes for me then). I am not sure how the foreclosure relates to paying off old electric bills though. I do understand that it will still be on my credit but other than that, I was trying to pay the other old debt off….
Does paying off the old debt lead to more problems with the foreclosure?
Do NOT try and do this yourself. As soon as you pay 1 cent to any debtor, you restart the debt clock. If you don’t know what this means, see an attorney.
And unless you are an expert negotiator and understand legal matters, you are best to seek a legal expert who is.
You are best to discuss this with a BAR certified attorney who specializes in this area. I would not get my legal advice from people who are not attorneys and who are not experts in this area.
edit:
When you initiate contact to creditors you are reopening a an of worms.
1. If you ofter to settle, they can still sue you during this process and find out if you have assets or money money to make the debt whole plus interest.
2. It is too late to "validate" the debt if it has been years. You have about roughly 30 days or so to do this from the initial debt.
http://www.fair-debt-collection.com/most-asked-questions.html#8
Disclaimer:
I am not an attorney. This should not be deeded as legal advice. Always seek a qualified legal advisor for legal related questions.
Additional resources:
http://www.fair-debt-collection.com/most-asked-questions.html
official US gov pdf
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre27.pdf
The Fair Debt Collection Practices Act (FDCPA)
http://www.expertlaw.com/library/consumer/fair_debt_collection.html
FDIC Law, Regulations, Related Acts
http://www.fdic.gov/regulations/laws/rules/6500-1300.html
edit 2:
You have a current foreclosure?
I would have said to get an attorney BEFORE that problem came to reality. If the foreclosure occurred this year, and the house sells or was sold at a price less than the amount you owed on the loan, the lender can issue you a 1099-C for the difference, which I am going to guess is going to be a lot more than $2000.00
If you get a 1099-C, (which would likely come in 2011, the IRS can then demand federal tax payment of this amount (the difference from the loan amount and sell price of foreclosed home).
IRS 1099-C (official site)
http://www.irs.gov/instructions/i1099ac/index.html
1099-C IRS Publication
http://www.irs.gov/pub/irs-pdf/p4681.pdf
1099-C Easier Reading
http://www.bankruptcylawnetwork.com/2010/02/06/the-dreaded-1099c-forgiveness-of-debt/
My understanding is the only way out of that is bankruptcy. Again, if you do not know your legal rights, how to defend against lawyers, bankers, collectors or the IRS, better get an attorney who does, or at least get legal advice before doing anything.
Please ignore all the spam that has been added to this post. Most are going to be financial scams, or other Y!A TOS violations. Have reports 1/2 dozen already.
edit 3:
"My foreclosure was over 3 years ago."
– Did the bank issues you a 1099-C?
– Have you received a 1099-C from prior creditors?
– Again, the smartest move is to get a free 30-60 min. legal consultation from a legal expert in this area.
Good Luck!
Get your credit reports at
annual credit report. com
Contact each creditor.
Offer them 30% of the totla debt in a lump sum.
If they turn you down, go on to the next collector.
If they all turn you down, call them all up again and offer 50% of the debt.
Get a book on Credit and Debt Repair from your library or bookstore.
The secrets are all there – worth the $20 dollars and 2 hours of reading.
A secured card from your bank will also help you build up credit.
But.. replace the money each month that you use – no games.
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NO more credit cards! make a policy of paying everything in cash or money order. Call one of those government-run facilities to aid you in consolidating your credit cards, and making one payment per month, as much as you can afford. You can find these agencies in commercials or look in the phone book…you seriously need the help, and it’s free.
Work on paying everything off by the moment it’s due, pay towards your debt, and future lenders will be happy to help you if you need it. Right now you’re in a hole, and you need to do everything possible to dig yourself out of it.
good luck!
your unsecured debt may be beyond the statute of limitations, which means collectors can still keep asking for it but a court would not be able to grant them a judgment. If you settle for less you might receive a 1099C for the difference, which would be added to your income as forgiven debt. you would have to pay taxes unless you can meet the criteria for insolvency or you file bankruptcy. If you can pay your debts you should. and paying in full would be the best but the original charge offs will be on your credit report for years, and the collectors will remain but will show paid if you pay. I went thru this many years ago and my credit is clean now. One other caveat…the IRS allows if not requires the collection agencies to send a 1099C even on old debt. So even after the statute of limitations has run, a collector can demand the money, you send them a drop dead letter and they send you a 1099C forgiving the entire amount. so be careful. stay away from those credit repair places… if you can afford it, a lawyer might be the best place to go. bankruptcy might be the best option for some people. be realistic. i avoided it, but mainly because nobody sued me. i just stopped paying after wasting what was left of my cash trying to pay…but the balances just kept growing. best of luck.
addition:
if its under 2000 then find a way to pay it. usually once its being handled by a collector, the original creditor is no longer involved…it has been sold for pennies on the dollar. so pay the collector.
A great way to get rid of your debt would be to consolidate it. My boyfriend is currently doing this and we were SO surprised at how easy it was. So first thing you’ll have to do is find an agency in your area, my boyfriend is using one called four pillars and its great. What they do is lump all your debt together, and then they pay it off for you. So now you pay them back, theres no intrest on it at all, and its a low monthly amount; $100. They’ll give you an amount based on your income, and a timeline of how long it will take you to pay it back, my boyfriends is for 15 months, and then, not only is your debt fixed but they will actually leave you with good standing debt when your finished! they dont just leave you at a 0!, and they give you a credit card to help build your credit up even more. So to answer your question about the credit card, yes thats a great way to build up good debt, as long as you pay it that is!, keep revolving credit, soo throw your gas or grocerys on your card every month and pay those off, and you’ll sky rocket your score! And you would have been buying that stuff anyways! =] .. you also might have some of that little stuff wrote off because of how long it has been in debt and how miniscual the amount is (in the debt world anyway), the agency you use will be able to tell you exactly what you owe to who. Hope that helps! -check the website out below might help too!
Just pay the settlement amounts. The original balance was with the original creditor. A percentage of that balance was paid to them by a collection agency in order to take over collection efforts. The original creditor has since written off the difference. If your original balance was $500 they may have sold your "account" to an agency for $200 and wrote off the $300 difference as cost of business. So, when the agency tells you that you now owe them $500 that’s not exactly true. The important factor is how long this bad debt remains outstanding. Pay off the settlement amount ASAP. And you can negotiate with collection agencies, too. Be proactive and call them! Tell them you want to settle this debt right away but you only have X amount of dollars. Sometimes (not always) they will accept it.
A secure credit card is only good for your score if you pay it off every month. I personally recommend putting a small balance on it and paying it off within 2 weeks. Try using it for 1 or 2 tanks of gas per month. And, whatever you do, DON’T CARRY IT WITH YOU! Eliminate the temptation. You will be surprised how quickly this small amount of responsiblity can positively effect your score within 6 months to a year.
The very first step is to contact the creditors or just start paying on the old bills if you have them around still. KEEP THE RECEIPTS !!
Get a loan from a bank say for $500 by having a deposit for that amount and a loan against it. This will give you a secured loan, and a positive on your credit history and you never need to pay it back, SINCE YOU HAVE IT in there already. The interest is like, I dunno, $35 for a year ? So deposit $535 and get a loan against it. You can call Steve Gorzynski @ 518 453 9146 for more info.
If you can swing a loan for the past due utilities, you could pay them all off and pay the loan at like $40 a month for a year. This would pay the bills off and rebuild your credit too.
You can always do like the well off Trucking Companies too later on. Stay perpetually in debt to maintain your score / history. Never have more debt than you can pay off immediately though., say a few grand max. Once you get rid of one loan, get another.
You should also look into learning about short term loans [like with Wachovia Securities, for example]. These earn 16% interest [it does vary a bit], and matures every 18 months. This will not only assist you in climbing out of debt, you can also build a nice nest egg over the next few decades.
http://debtreliefreviews.net/top-debt-consolidation-companies/ has good information and several reviews for debt consolidation companies.
Settling debts is great if you have the money to get it done. The creditors will usually settle for about 35% to 65% of the actual balance. The problem is it stays on your credit report as a settlement. You may want to think about tying to go through a credit repair company. Just don’t sign up with one that wants a huge upfront fee.