Advice regarding CC's, Settlements, and Secured Credit Cards.

**anae428** · 02-17-2006, 06:45 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

I was in that same situation. I accepted settlements with my unsecured credit cards. They saved me about $500 each. Don't worry about your credit score right now, that's already down the tubes. Focus on how to make your "Debt to Income Ratio" better, and the way to do that is to get rid of your credit card debt. I was in a lot of collection problems recently. I started taking the settlements offered to me, and now I'm making about 3 large settlement payments, and by March, my debt will be slashed down. I'm doing that with each credit card. My credit is horrible, but I'd rather be debt free sooner and keep my deb to income ratio much better.

**Ima saver** · 02-17-2006, 06:49 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Yes, I would get a secured credit card and accept any settlements you get offered.

**sweeps** · 02-17-2006, 09:37 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

As mentioned in several other threads, get your settlement in writing before paying a dime. Make sure the agreement states that once you've paid the settlement amount, your credit report will show "paid in full".

Also you may not want to accept the first settlement offer you're given. If necessary, go directly to the original creditor and negotiate the settlement -- often times you can get a better deal than through the collection agency.

**mrpeepers74** · 02-17-2006, 01:52 PM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

I was under the impression that once a collection agency had the account in their files, then it was essentially theirs, and that I could not go through the initial lendor. So in the case of Discover, I have an agency calling me on it, and have sent settlement letters. Should I contact Discover, or call the collection agency and negotiate the settlement?

thanks

**sweeps** · 02-17-2006, 05:28 PM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Originally posted by mrpeepers74

I was under the impression that once a collection agency had the account in their files, then it was essentially theirs, and that I could not go through the initial lendor. So in the case of Discover, I have an agency calling me on it, and have sent settlement letters. Should I contact Discover, or call the collection agency and negotiate the settlement?

Sometimes the lender sells off the debt to the collection agency, but often they simply contract with a collection agency to collect debts for a percentage of the settlement. In the latter case, you can still negotiate with the original lender. If you want to settle, I would contact the lender directly to see what they will offer. If you don't want to settle, I wouldn't contact anybody -- just cross your fingers and hope the debt goes past the statute of limitations.

I think there are a few people in these forums who have worked at collection agencies -- they may have some additional information or strategies.

**shelbylovesmelby** · 02-18-2006, 08:17 PM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Alot of times lenders would rather you pay them directly despite it being in collections. The collection companies take up to 60% of what they collect, rather than giving it to your creditor.

A secured credit card would be a nice way to start over. Start with something small like $500. Alot of times credit unions will give you a limit that small & if you have paid on time or early they may consider you for a regular card @ a lower rate & refund you your security deposit. And as far as purchases go buy only some thing little and make 2 pmts on it even if you can swing the full amt but it shows payment history w/out your debt getting out of hand.

Also I would start paying off the debt that is the least amount and work your way up to the larger ones. As you pay them off remember to get letters if they don't send them to you saying that the debt had been satisfied. Because it may take some time for the paid debts to fall off & some creditors don't report the amts paid off promptly either.

**mrpeepers74** · 02-21-2006, 11:11 PM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

ok, so myfico is at 615, even after student loans (7 bad collected accts, and 2 bad credit card accts in collections) Definately not pretty, but i'm not sitting at 300 either.

I have about $1600 I can use to either pay down debt/settle with credit card company/ open secured card or continue to stash in my savings. Do I request a settlement on an unresolved credit card? Last activity on those accounts was about 2003. Do I just make payments and clear it up the honest way?

One last question. My income tax return was absorbed by the government because of my student loan status, and another unpaid income tax from a couple years back. That income tax is now paid off, albiet under the original sent to collections status. How will that look now on a credit report? I genuinely want to pay down the debt I have and let it heal. I have been managing money to accomodate this.

**sweeps** · 02-22-2006, 03:15 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

peepers, it sounds like these debts are really weighing on your conscience. My opinion is that for your own piece of mind, just start settling them and paying them. Short term, your FICO will probably fluctuate quite a bit, but long term your score should improve faster than it would otherwise.

I would write down every debt on a piece of paper (or enter them in an Excel spreadsheet). Go down the list and call these companies for their best settlement offer. Be polite and honest, but don't be afraid to play a little hardball either. Be sure to record exactly when you called, who you talked to, and what was agreed upon. Plus I've said this many times -- Get the settlement offer in writing with the assurance that when the agreed amount is paid, it will show PAID IN FULL on your report.

**sweeps** · 02-22-2006, 03:18 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Forgot to mention -- if you still have unpaid income taxes or other bad debts with the federal government, those are your first priority. Being delinquent with the IRS is hazardous for your health.

**mrpeepers74** · 02-22-2006, 08:37 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

I worked with USAA today to settle an outstanding credit card account for 50% of the balance. I was told they cannot do "paid in full." But, I can go make payments to satisfactorily pay the remaining balance to get my usaa benefits back, and it will then go to paid in full on the report. So, that's one step, at least half of my outstanding is taken care of for the time being.

amount due was 2200, i paid 1100.

**MrsChambers** · 02-22-2006, 08:53 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Do I follow up on the credit cards in collections and pay them off?
---> You need to get those credit cards that are in collections and write those collectors and ask them to VALIDATE the debt. You see, first each collection agency that is collecting from you needs to be legal to collect in your state.. not all of them are, and they count on the fact that you don't know that - then, when and if they do VALIDATE this debt, then you ask them to PAY FOR DELETION... this means that you pay them the amount that they request of you (always do everything in writing and KEEP that paperwork!) and in turn, they DELETE that tradeline from your report. (poof-bad tradeline gone away!) If they are not legal to collect that debt from you in your state, OR they can not VALIDATE that they own that debt OR that YOU are responsiable(?) for that debt, then they must remove that negative tradeline from your report(s)..

Do I take the settlements I've been offered?
---> NO- try to get them to PAY FOR DELETE... if you take a settlement that they have offered, you first need to make sure (if it's a collection agency that has offered you this settlement) that they are AUTHORIZED to offer you this settlement. Often times collection agency's will do this, and take your cash, however the original creditor wants ALL their cash and turns our, never authorized this collection company to take a smaller amount... this is another good argument that you need to VALIDATE your debts.... if you can not get them to PAY FOR DELETE, then I would consider the settlement. HOWEVER - this will usually also show up on your credit reports that it was paid, but it was a settlement payment and not paid in full.

I expect when the student loans are caught up I should see a jump in my credit score. Is that true?
--->Generally speaking, indeed. However, depending how you tackled that SL you may or may not still have those negative tradelines still on your report. Most time's, when you "re-hab" your SL your negative tradeline will stay on untill you are done re-habbing that loan (6months perhaps) and then when your loan is "baught back" that tradeline will then be removed alltogether.
Lastly, I have debit cards, but not a real credit card as i've burned that bridge. Is it worth investing into a secured credit card to establish better credit?
---> YES, DO IT! I would reccomnd that you get a secured CC with your local bank that you already bank at OR a credit union.. I would NOT reccomend that you get a secured CC from one of these sub-prime lenders like: ORCHARD BANK, PROVIDAN, or any of those people... get yourself a secured card in the prime market.

Have you looked at your credit report. You get a free credit report each year. UTILIZE THIS FREE SERVICE. you have to pay for your score.. but I think at this point in time, you need to focus more on repair and building rather then the actual number.

let me also tell you about this for your future credit needs.

CHEVRON has a credit builder card. you apply for the regular CHEVRON card and you will get declined. If you qualify (no, I don't know the qualifying standards) they will send you a denial letter, BUT the letter also asks you to call them.. you call them, they verify info from your application, and then they offer your a Re-Builder card.

TARGET store card is also a some-what easy card to get.. dont apply for the Target Visa, just the red store card. (don't apply now, this is for the future please)

WAL-MART store card is also an easy one to get... however, you may get a credit line of something like $75 bucks... but it's a positive tradeline on your credit reports.

also, I have to promote www.creditboards.com check them out... they are a GREAT resource!

PEACE

**sweeps** · 02-22-2006, 10:53 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Originally posted by mrpeepers74

I worked with USAA today to settle an outstanding credit card account for 50% of the balance. I was told they cannot do "paid in full." But, I can go make payments to satisfactorily pay the remaining balance to get my usaa benefits back, and it will then go to paid in full on the report. So, that's one step, at least half of my outstanding is taken care of for the time being.

amount due was 2200, i paid 1100.

**sweeps** · 02-22-2006, 11:01 AM

Re: Advice regarding CC's, Settlements, and Secured Credit Cards.

Originally posted by MrsChambers

you ask them to PAY FOR DELETION

Mrs. Chambers, this idea sounds interesting... it's the first I've heard of it. But I'm doing a search, and most of the information I'm finding about it is that it's rare that a collection agency will even do it. And if they do, you have to pay 100% of the balance. I think people who are having trouble paying off their debts won't be able to afford to do this. Am I missing something?

Advice regarding CC's, Settlements, and Secured Credit Cards.