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My Daughter Was an Authorized User and Ran Up My Debt. I Have Cash to Settle. – Sharon

“Dear Steve,

23K on credit card debt. I am retired and do not make enough to pay these credit card bills any longer.

I let my daughter be an authorized user on 2 credit cards. She and her husband both lost their jobs and just recently broke up. I have been able to make the minimum payments for over 6 months, but have just about ran out of savings which I have used for this.

My income is $1397 per month on Social Security Diasbility). The credit card payments are $375 per month. I can make ends meet with this but it is soooo difficult. I don’t want to go bankrupt because I do have joint ownership on some property with my husband.

We live separately (for over 6 years). My name is on both of our homes, along with his. We don’t divorce because of the children. I am 62years old. If I continue to pay the minimum payments on the Credit cards that my daughter ran up (I never used them) it will take 44 years to pay them off. I have another daughter who can lend me $10,000 If I can settle with the credit card companies.

Sharon”

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The Answer

Dear Sharon,

Sadly, the debt your daughter ran up is your debt and your responsibility. As an authorized user she has no responsibility for the debt, except to you.

I’m glad you contacted me before you were stone cold broke. As you can see the approach of draining the savings to make the payment is not a great approach. Typically the only thing that happens here is you wind up broke but still with the remaining debt.

Your situation is a great example of a time when settling the debt is a reasonable and logical approach. You have cash on hand to settle the debt and you have assets that would be in jeopardy if you filed bankruptcy.

Settling the debt has consequences and potential tax implications for you. You should discuss this with the settlement advisor you decide to work with. If you wanted to try to settle this debt and pay the least amount for professional advice to do this I’d suggest you contact Consumer Recovery Network or ZipDebt.

I know you tried to do a nice thing by allowing your daughter to use your card but please don’t do that again. She can easily get her own secured card even if she has bad credit and she should probably do so any to build her credit.

This is not the end of this issue for you either. This unfortunate episode will leave a deep scar on your credit and we are going to need to get your credit back on track again.

It’s obvious that you are a generous and caring person but at 62 you can no longer afford to make financial mistakes that will rob you of your future. It’s time for your daughters to lookout for you.

Please post your responses and follow-up messages to me on this in the comments section below.

Big Hug!

My Daughter Was an Authorized User and Ran Up My Debt. I Have Cash to Settle.   Sharon
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Sharon

    This is Sharon.  I have done some investigation into several of the Settlement companies listed below, and have decided to try and settle with these two credit cards on my own.  If I do not get a good response, then I will purchase ZipDebt.  Thank you, Get out of Debt Guy.  I am feeling a bit more confident after reading your comments.

    • http://GetOutOfDebt.org Steve Rhode

      Sharon,

      Best of luck. A coach can help tremendously if you get stuck. Just remember to get any offer in writing before you make any payment. Make sure the debt forgiven is specifically listed as forgiven and know that that part forgiven should be listed on your credit report as a bad debt.

      Steve

  • Settmaster

    Hi Sharon,

    Consumer Recovery Network and Zipdebt can maybe get the job done.  Both of those companies don’t really engage in volume settlements with creditors and the amount you will need to pay back will be larger than working with a settlement company that does high volume settlements.

    Based on your age, current income, home ownership and the ability for one of your daughters to loan you some money it would probably be best to work with a high volume settlement company that can save you more money than Consumer Recovery Network or Zipdebt.

    High volume low dollar settlements exist with;

    Freedom Debt Relief
    American Financial Service
    Everest Debt Solutions
    Freedom Financial
    Prestige Financial Solutions
    Fast Track Debt Relief

    Hope this helps!

     

    • http://GetOutOfDebt.org Steve Rhode

      I respectfully disagree. CRN for example charges 15% of savings to settle a debt. How much do those companies charge, a heck of a lot more.

    • Charles

      Sharon, please disregard the above comment, which is totally false and obviously just a sales pitch for traditional debt settlement. As a 15-year veteran of the debt settlement industry, I can tell you that these companies have *zero* influence over what percentages the major creditors are willing to accept for settlements, and by the time you include their sky-high fees, there is simply no comparison to the results we’ve achieved at ZipDebt.

      When you set aside the claims and look at the actual data, there is absolutely no question — consumers get superior results through the approach of handling their own negotiations with the advice of a good coach. Here is a link to our published results:

      http://www.zipdebt.com/blog/2011-debt-settlement-success

      In 2011 alone, ZipDebt clients settled $8.5 million of credit card balances at an average of 32.2% of the balances at time of settlement. ZipDebt clients settle faster for less money out-of-pocket, period. Anyone claiming otherwise is welcome to post links to the *published* track records for these so-called “volume” firms. Let’s compare the results side by side and see who is better.

    • http://www.debtconsolidationcare.com/reporter/ Michael

      Hi Settmaster,

      I have no clue why you would post a comment like that unless you believed it. Regardless, there are several issues with what you posted. They are as follows:

      You said “the amount you will need to pay back will be larger than working with a settlement company that does high volume settlements.”

      This is not a true statement. I know that sales people for settlement service providers like to say bulk is better. Its not. It just sounds good. None of the companies you listed can come close to competing with CRN’s settlement percentages. Consumers settling accounts themselves directly with their creditors (without a service provider negotiating with, or contacting creditors in any way), which is what I would advise Sharon to do, will realize a better percentage savings on the credit cards settled with many of the major credit card issuers than the companies you listed. In fact, since 2004, CRN members settling their own accounts actually beat CRN’s full service settlement percentages by about 3%. Our members do tend to ask us to assist on the tough accounts that are in advance delinquency while they handle the pre charge off stuff themselves following predictable guidelines and time frames.

      You said:
      “it would probably be best to work with a high volume settlement company
      that can save you more money than Consumer Recovery Network”

      I would disagree for the following reasons:

      1. The high volume reference is not real (If high volume exists its when scrubbing with debt buyers and getting the same 40-ish% smaller companies achieve just as well – as do consumers on their own).

      2. CRN’s lifetime average when measured by full service settlements performed (not including refunds, drop outs etc.) is just under 37% of enrolled balance. Here is the kicker Settmaster – Our members settling debts on their own have a lifetime average of 33%. So, save more with the firms you felt the need for some reason to list in your comment above…. I kinda doubt it.

      3. The fees a company charges are part of the cost of hiring someone to settle debts for them. I know what some of the companies you listed have their fees set at and they are far too high at typically 15 to 20% (even higher) of enrolled balance or 30 to 40% of savings (even higher) . CRN has charged 15% of savings for full service settlement since 2006. The vast majority of settlements we have done resulted in NO % of savings fees charged to the customer. We asked customers to donate fees to low income legal aid offices or to the local food bank in the form of non perishable food items.We stopped that practice a couple months back unfortunately. We instead refer clients in states we used to encourage donations be made  – to licensed and bonded service providers and attorneys who have agreed to settle debts for 15% of savings.

      So… bulk settlements and save customers more money because of it – No.

      High volume/larger companies charge too much and get worse settlements than both the consumer and CRN (and Zipdebt to my knowledge) – especially when dealing with pre charge off accounts with most large credit card issuers.

      I am not sure how you know the efficacy and results of that many companies you listed. I do wonder if you know much about them, since you made assertions about CRN that were not accurate representations. I have spoken with – and like – some of the people that work for those companies. I am quite certain they would prefer not to compare notes publicly about the issues you have posted.

      I am however open to comparing notes if anyone wants to.

      Also, just so people reading this know – CRN is an exceptionally small company compared to those listed above and always has been. We do no paid advertising.

      We have not heard from anyone named Sharon in the last couple of days. If Sharon is reading this reply – I encourage you to do as much, if not all, the settlements on your own and not pay anyone to do it for you. It is not difficult and the process is largely predictable if you learn the ropes ahead of time. In the spirit of not shilling for a customer, I would highly recommend you (and anyone reading this) contact Zipdebt. Charles, the founder of Zipdebt, pioneered DIY settlement education and support for same. His material has not been equaled since the first printing in 2004. He offers a 365 day guarantee. I kinda doubt the companies listed in Settmasters comment do that.

      • Angelo

        Well said Michael.  

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