“Dear Michael,
I have the great deal credit debt – long story – used a number courtesy checks against these credit cards to add monies into company believing I would pay them off. Well that did not happen, so I have been paying monthly and these amounts – never go down due the interest rates.
Instead of using one of these companies – can I deal with these credit card companies myself and negotiate a settlement or plan.
Just curious
Larry”
Dear Larry,
You not only can work out a settlement with your creditors yourself, it should be the first approach you take. Hiring a company to negotiate settlements should be reserved for the following situations:
1. You hit a wall with your own negotiation efforts with one or more creditors that have a known policy of working directly with debt resolution companies.
2. You have an account that reaches critical stage collection in the courts and would be best served working with an experienced debt defense attorney.
3. You just simply do not have the time, inclination, or intestinal fortitude (personality type) to do all the negotiation.
Number 3 obviously does not apply to you because you are already motivated to deal with the debts without professional intervention.
Number 2 is just smart should a collection lawsuit occur, but if you are a good candidate for settlement, or payment arrangements on your accounts, lawsuits are not likely.
Number 1 can and does happen, but will be situational and likely not something you can predict right out of the gate if you are not behind with payments right now, or only a month or two behind.
I can better help you assess your options with each creditor if I knew the following:
- Name of creditor and type of account (business, personal, credit card, line of credit/signature loan).
- Current balance on each account.
- How far behind in payments each account is.
- How long ago each account was tapped for a cash advance or courtesy check (recent transaction of this nature can often narrow debt relief options).
I should point out that settling may not be necessary if your debt could be made more affordable by getting the interest rate reduced. There are ways to get your creditors to play ball with lowering your monthly payments, either temporarily, or for the life of the balance. Depending on how many creditors you have to contend with, and their current policies for payment and interest rate reduction, it can make good sense to get your debts consolidated using a managed plan through an agency like Cambridge Credit Counseling.
I know that most people have an immediate knee jerk to seeking discharge of unsecured debt though chapter 7 bankruptcy. But if you qualify, it can often make more sense than settling, or any other approach. Filing bankruptcy is one of those things that are better done working with an attorney than going the DIY route.
If you post more details about your accounts in a comment below I can offer more feedback geared toward settling and payment arrangements.
Michael Bovee founded CRN, a unique company offering debt negotiation education and services, in 2004. He recently published CRN’s free online debt relief program as a tool to assist you with making informed decisions about dealing with problem debt, while keeping an eye on your future credit needs and goals. Bovee has been contributing articles and free reader feedback on this site for several years.
Michael is a debt industry professional who has volunteered his time to help answer reader questions.
If you have a debt related question you’d like to ask our team, just use the online form.
Thanks for the additional detail Larry.
If I exclude debts #1 and #2 from the totals, you have about 119k. Given your comment that the rates on many of these are high, what if the monthly payments on all but the first 2 debts were 2500.00 a month? Would you be able to maintain payments on the first 2, and still afford the 2500.00 monthly with a high level of confidence? If so I would suggest talking to the nonprofit agency I mention in my response above to get an accurate quote of what your payments can be reduced by using a longer term debt management plan (my 2500.00 was based on an average monthly payment with interest rate concessions obtained by credit counseling companies). Be prepared with your income and expenses when you make the call.
Given the debt amounts involved, I would make an assumption that you would not qualify for a chapter 7 bankruptcy based on your states median income test. But what state are you in? How many in your household? What would you estimate you pay yourself over the last 6 months? I realize the desire to avoid bankruptcy. Your reason for doing so being the potential loss of business is a valid one. But it is good to go through the exercise.
It is a good idea to weigh the costs, benefits and drawbacks of chapters 11 and 13, set beside settling directly with your creditors, and later debt collectors. I can offer my assessment of the settlement figures.
Assuming you can resolve all of the above accounts other than #1 and #2 for about 50k, how long would it take you to pull together that amount? Be very confident with your reply. If there are resources you can tap that are not part of your monthly income, include that. If your only resource for accumulating 50k is going to be from monthly cash flow, do not pad the amount on the high side, nor shoot too low to add a personal comfort factor. The number should be an amount you know you will be able to commit to – knowing that things will be skinny in order to save up as fast as possible. Also know that the 50k is a round estimate. You have some creditors that offer great balance concessions when settling, but if you have made recent cash advances and convenience checks (last 12 months), that estimate may be too low. If not, it may be a touch too high.
I look forward to your reply.
Michael: I e-mailed this company twice – on you news letter – you state this one of the best companies – please and advise if it is – I value your opinion – thanks Larry Marcus
lmarcus306@aol.com
***************************************************************************
From: LMarcus306@aol.com
To: jszalicki@cambridgecredit.org
Sent: 6/18/2013
12:42:57 P.M. Central Standard Time
Subj: Fwd: Cambridge
Did you receive my e-mail ??
Any advise John – on what available programs you company offers ??
Please advise
Larry
__________________________________________
From: LMarcus306@aol.com
To: jszalicki@cambridgecredit.org
Sent: 6/13/2013
6:10:40 P.M. Central Standard Time
Subj: Re: Cambridge
Hi John:
Enclosed is the advise I received.. But I personally do not have the time to negotiate with all these credit care companies, but at least you will get picture of my situation.
Not sure how your company works once we agree a program. Once you read this please e-mail me and then I can call you – thanks Larry Marcus
Larry – Consulting with a credit counseling agency is step 2 in a 5 part process of elimination process I recommend for deciding how to approach unaffordable debt.
Yes, I do recommend Cambridge as a go to resource to determine if a managed repayment plan can fit your debts, budget & income, and personal financial goals.
Perhaps something was lost in translation with your email attempts. I do know that you would be better off calling and speaking with a credit counselor in order to get the full picture, and an accurate estimate, of what your payments may be in a managed repayment plan. You can them at 888-948-4425.
Side note – If you have a Disqus profile I would recommend editing your above post to remove the email addresses. Scrapers will find them, which can lead to a considerable amount of spam being sent to that email address.
Hi Michael:
I copied part of your reply. I am not behind on any creidt card or my home mortage or car payments. I just can’t keep paying these amounts on my credit debt. I own a business – so I do not want file personally chapter 7 or 11 – can not let my client know my financail problems.
See below:
Number 1 can and does happen, but will be situational and likely not something you can predict right out of the gate if you are not behind with payments right now, or only a month or two behind.
I can better help you assess your options with each creditor if I knew the following: Name of creditor and type of account (business, personal, credit card, line of credit/signature loan). Current balance on each account.
1. American Express – company card – $18,000
2. Gold Americn Express – $20.000
3. personal Blue American Express – $18,000
** presently my company pays the monthly bills on these.
4. Bank of America Amex – $9500
5. Chase – $875.00
6. Chase – $800.00
7. Chase – $17,000
8 Citi Bank – $18,800
9. US Bank – $4200
10. US Bank $14,000
11. Elan – 17,000
12. Elan -19,000
I stop there – a couple more with PayPal and Discover – So at present 4. through 12 I pay the minium every month.
How far behind in payments each account is. (NONE)
How long ago each account was tapped for a cash advance or courtesy check (recent transaction of this nature can often narrow debt relief options). Most of them when I needed money to put into my company.
It has been over whelming as you can see to deal with debt each month – just do not know what to do Mike. Any futher suggestions would be great – Larry Marcus